A report reveals a gap in the UK’s purpose-built student accommodation
(PBSA) market, with 65% of properties built before 2012 needing
modernising.
Global property consultancy Knight Frank says this shortage of modern
living spaces, coupled with rising student numbers, creates a two-tier
system and impacts university choices.
Its
NextGen Living
2025 report, based on insights from institutional investors managing £60
billion in UK living assets, highlights the need for collaboration between
universities and private sector providers.
Doing so would see student housing being upgraded to meet evolving student
needs for modern, high-quality accommodation.
Since 2012, only 260,000 new student beds have been added, while the number
of full-time students has increased by nearly 470,000.
‘Unsuitable accommodation constitutes a risk’
The firm’s global head of living sectors research, Matthew Bowen, said: “At
a time when university finances are increasingly stretched, partnerships
between universities and the private sector can help address these
challenges.
“Ultimately, insufficient or unsuitable accommodation constitutes a risk to
university reputations, and student recruitment.”
The report emphasises that quality student accommodation has an influence
on university applications, with nearly two-thirds of students pointing to
it as a factor.
It found that student satisfaction with available accommodation options
remains low, with less than 70% believing there are enough choices.
Accommodation is a key part of a university’s offer
Merelina Sykes, the joint head of student property at Knight Frank, said:
“Accommodation forms a key part of a university’s offer to incoming
students, both domestic and international.
“Our student accommodation survey undertaken in partnership with UCAS
revealed that nearly half of applicants start researching their housing
options before formally applying to university.
“This underscores the importance of getting it right – not just to drive
lease-up and occupancy but to support sustainable rental growth.”
She adds: “In today’s competitive market, upgrading and maintaining
existing stock is more important than ever.
“As we look ahead to 2025, more opportunities for collaboration will
emerge.
“By working together, universities and investors can create a pipeline of
modern, sustainable accommodation that meets the needs of a growing and
diverse student population.”
Challenges for the PBSA sector
Despite the challenges for the PBSA sector, investment in the broader
Living Sectors, which includes student housing, build-to-rent and senior
living, reached more than £10 billion in 2023 and is expected to rise.
Institutional investors plan to
deploy £45 billion
over the next five years, with student housing ranked as the second most
attractive asset class, behind build-to-rent.
Knight Frank values the UK’s purpose-built student accommodation sector at
£89 billion.
‘Attract and retain student tenants’
The managing director of Accommodation for Students, Simon Thompson, said:
“For student landlords, the Knight Frank report paints a clear picture of
both challenge and opportunity.
“The significant proportion of outdated properties presents a compelling
case for refurbishment and modernisation.”
He added: “Landlords who proactively address the need for high-quality,
modern accommodation will be best positioned to attract and retain student
tenants.”
Mr Thompson also says that the undersupply of suitable student housing,
coupled with increasing student numbers, creates a favourable environment
for those landlords willing to invest.
