The demand for purpose-built student accommodation (PBSA) in most global
study destinations exceeds the number of beds – and the problem is worst in
the UK, research reveals.
According to property research firm Bonard, the worst supply and demand
imbalance is in London.
Its 2024 annual report highlights that overseas learners continue flocking
to major study hubs which has led to a robust performance in the student
accommodation market last year.
Student housing sector is stronger
The firm says: “Following several years of steady growth,
the student housing sector is emerging stronger
, with 2024 already showing signs of increased transactional activity and
more significant opportunities expected in 2025.
“Investors now view student housing as the most attractive living sector
for 2025, citing its stability, strong returns and resilience to market
fluctuations.
“Interest in the sector is surging as its fundamentals remain robust,
driven by rising student demand, higher rents and full occupancy levels in
most global markets.
“However, development pipelines are struggling to keep pace with demand,
widening the gap between available beds and student needs.”
Students might head elsewhere
The report forecasts a pivotal shift this year, suggesting that escalating
rents might nudge international students towards cheaper study destinations
which offer courses in English.
It states: “Political instability and new regulations in force in popular
study destinations restricting access to international students could
impact student housing operations.
“This is a concerning development for sector stakeholders in these
destinations.”
Despite this, the researchers remain optimistic and say: “We can
confidently say that the student housing sector is so severely
undersupplied that a temporary decrease in the number of incoming
international students would not have a substantial negative impact.”
65,000 new student beds
Across 131 cities globally, nearly 65,000 new student beds hit the sector
last year with southern Europe, namely Spain, Italy and Portugal, seeing a
surge in PBSA construction.
Analysts link this boom to tightening immigration rules in nations like the
UK, Canada and Australia, hinting at a redirection of student interest.
Meanwhile, the 2023/2024 academic year saw a 2.8% rise in international
student numbers in most surveyed cities, fuelling a hefty 7.4% jump in
rents.
That’s the steepest rent rise since 2018 which sits alongside a near-full
occupancy rate of 97%.
Student accommodation demand
While London remains the epicentre of the student accommodation
demand-supply mismatch, it’s also witnessing the most significant building
activity.
Close behind is Paris, albeit at a slower pace than last year.
Elsewhere, building growth varies: Lisbon and Berlin report fewer beds in
progress, while Milan and Stockholm have scaled back planning, and
Amsterdam has seen a slowdown in both planning and building.
Looking ahead, a webinar tied to the
report
polled more than 1,000 global participants, with 55% expecting rent hikes of
3-7% by September 2025.
However, they warn that affordability issues could temper this rise.
Demand for PBSA
The managing director of Accommodation for Students, Simon Thompson, said:
“For student landlords in the UK, the report highlights the strong demand
for purpose-built student accommodation, especially in academic hubs like
London.
“While investors might be attracted, there is the shadow of rising rents
and shifting student preferences.”
He added: “This issue of affordability which might nudge international
students towards southern Europe’s emerging study havens, means UK student
landlords can capitalise on this demand with quality homes and attractive
market rents.”
