Investment into the UK's purpose-built student accommodation (PBS) market climbed to £4.3 billion in 2025, Knight Frank reports.
The property consultancy says that renewed portfolio activity and steady investor demand for income-producing assets have helped to lift the sector.
Its latest Student Market Update reveals that nearly £880 million landed in the final quarter alone to push annual volumes 10% higher year-on-year.
That total sits just shy of the 10-year £4.5 billion average as 79 deals were completed, up 20% on 2024.
PBSA is attractive
The firm's joint head of student property, Merelina Sykes, said: "The PBSA sector continues to be an attractive asset class, and investment volumes in 2025 were supported by the return of portfolio level transactions, with core plus and value add investors increasingly focused on scale.
"But with operational opportunities finite, investors have explored alternative deployment routes, with a record number of funding deals and joint ventures taking place."
Operational single-asset PBSA schemes once again attracted most of the capital spend which matches long-term patterns.
But the year didn't belong solely to smaller lot sizes.
Knight Frank says that 13 student accommodation portfolios changed hands last year, five of them above £200 million.
Strong PBSA pipeline
The development of PBSA delivery picked up too, with 19,600 beds completed across 64 schemes – up 20% year-on-year.
Despite the rise, PBSA supply is still behind the pre-pandemic five-year average of 25,000 beds.
London accounted for the largest share of new completions at 4,350 beds, Nottingham follows with 2,550, and Leeds came third with 1,900.
The data shows that the forward build pipeline remains very large with another 50,250 beds being built currently in the UK.
University applications up
The consultancy also points to university application data which continues to strengthen the sector's footing.
Universities received a record 619,360 applications for the 2026/27 academic year, which is 3% higher year-on-year by January’s UCAS deadline.
UK applicants reached 494,540, while overseas demand grew to 124,830, up 5%.
Higher tariff universities now account for 43% of undergraduate applications, up from 39% in 2019.
Middle tariff providers saw 1% growth, while lower tariff universities recorded a 1% decline.
Knight Frank's associate in global living sectors research, Katie O’Neill, said: "Assets in Russell Group cities – or portfolios offering genuine value add opportunities through cap ex programmes – remain the first choice for investors.
"Yet, an attractive 10-year gilt environment and share price declines among publicly listed sector participants have put returns into perspective for investors."
Student accommodation opportunity
Simon Thompson, the managing director of Accommodation for Students, said: "It's great to see strong investment in the PBSA underlining how strong the student accommodation sector is.
"For smaller student landlords, it's worth noting that while investment is rising and student demand remains robust, most of the capital is being focused on prime university cities."
He added: "That means there are still opportunities for student landlords offering quality accommodation - especially since university application volumes are rising.
"It appears that institutional investors are chasing scale and premium assets, but that leaves space in the student accommodation sector for well-maintained student houses at good rents."
