UK PBSA Investment Climbs to £4.3 Billion in 2025

Investment into the UK’s purpose-built student accommodation (PBSA) sector increased to £4.3 billion in 2025, according to research by global property consultancy Knight Frank. This represents a 10% rise compared to the previous year, with nearly £880 million invested in the final quarter alone. The total annual volume is close to the long-term 10-year average of £4.5 billion, indicating steady market confidence.

There were 79 PBSA transactions completed throughout 2025, a 20% increase on 2024 figures. This growth is underpinned by strong institutional demand, particularly for larger portfolio deals.

Why PBSA Remains an Attractive Asset Class

Merelina Sykes, joint head of student property at Knight Frank, commented: “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.” She highlighted that operational opportunities are becoming limited, prompting investors to explore alternative routes such as funding deals and joint ventures, which reached record levels last year.

Sykes also noted ongoing challenges in the development landscape, including delays caused by the Building Safety Regulator’s Gateway 2 process and planning and viability constraints. However, she observed signs that these obstacles are gradually easing, which could facilitate future growth.

Large Portfolio Transactions Drive Market Activity

While single-asset operational deals continue to dominate the PBSA sector, 13 portfolio transactions were completed in 2025. Five of these deals exceeded £200 million in value, underscoring investor appetite for larger-scale investments.

Construction activity also increased, with builders completing 19,600 new beds across 64 schemes—a 20% rise compared to the previous year. Despite this growth, supply remains below the pre-pandemic five-year average of approximately 25,000 new beds annually, suggesting ongoing demand pressure.

Robust Pipeline of PBSA Beds Under Construction

London led the construction output with 4,350 new beds delivered, followed by Nottingham with 2,550 and Leeds with 1,900. Nationwide, there are currently 50,250 PBSA beds under construction, indicating a substantial pipeline despite regulatory and planning challenges.

Strong student demand supports the sector’s prospects. By the January UCAS application deadline, universities had received a record 619,360 applications for the 2026/27 academic year, a 3% increase on the previous year. Domestic applications rose by 3% to 494,540, while international demand grew faster, increasing by 5% to 124,830.

Within this growth, there is a notable shift in student preferences. Applications to higher-tariff universities rose to 43% of the total, up from 39% in 2019, with annual growth in this segment reaching 6%. In contrast, middle-tariff institutions saw 1% growth, and lower-tariff providers experienced a 1% decline.

Implications for Landlords and Letting Agents

The sustained investment and development activity in the PBSA sector signal ongoing opportunities for landlords and letting agents specialising in student accommodation. The rise in portfolio deals suggests increasing consolidation, which may influence market dynamics and rental offerings.

The strong pipeline of new beds, combined with growing student demand—particularly at higher-tariff universities—indicates potential for rental growth and occupancy stability. However, landlords should remain mindful of regulatory and planning challenges that could affect development timelines and supply.

Suggested internal link anchors

– purpose-built student accommodation
– student property investment
– portfolio transactions
– PBSA development pipeline
– student demand trends
– UK student housing market
– regulatory challenges in property development
– Building Safety Regulator Gateway 2
– student accommodation supply
– higher-tariff universities applications

TLA update

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