UK’s PBSA sector to grow by 7% this year, Savills finds

The UK’s Purpose-Built Student Accommodation (PBSA) sector is continuing to grow, according to global real estate advisor Savills. A shortage of supply combined with rising student numbers has resulted in strong rental performance, with over 7% growth forecast for 2023/24. Even more growth in demand is expected, with UCAS projecting that the UK could reach one million university applicants in 2030, which will place existing PBSA stock under even greater pressure. James Hanmer, head of UK PBSA investment and co-living, operational capital markets division at Savills, said: “The UK remains one of the key global destinations for students looking to study abroad. There are currently more than 600,000 full-time international students, up from just over 400,000 five years ago, according to figures from HESA. “While there has been a fall in EU students in the wake of Brexit, this has been more than offset by significant growth in the number of students from India, as well as continued strong numbers from China and elsewhere.” Despite a great need for PBSA, the total pipeline of new stock is only 144,000 beds nationally, according to Savills analysis of data from Glenigan, with only a quarter of these under construction. As a result, occupancy levels are at record highs, supporting rental growth of around 7%, according to Unite and Empiric, which is expected to drive continued strong investment returns over the coming years. Savills PBSA Development League Table indicates particularly strong development opportunities in Canterbury, Durham and Glasgow, all of which have seen strong growth in their student populations, with the former two also seeing rising applications, which will put pressure on existing stock. Southampton, Bournemouth and Cambridge have moved up to the Upper Second tier of the Savills league table, as rising student numbers put pressure on existing stock and with a relatively limited pipeline of new schemes to meet those increases. In spite of the weaker macroeconomic backdrop, which saw overall real estate investment in the UK down by -14.2% in 2022, PBSA bucked the trend with a record-breaking £7.8bn of stock traded, an increase of +89% on 2021 figures. Over the past three years, 82% of investment in UK PBSA has come from overseas, with investors from USA and Singapore accounting for 47% and 24% respectively over this period. Savills recent European Living Investor Survey found that around two-thirds of investors are looking to deploy more capital into PBSA over the next three years. Of investors looking to expand in the sector, close to a fifth expect to deploy more than €500m (£435m) by 2025. Richard Valentine-Selsey, head of european living research and consultancy at Savills, said: “The current supply and demand dynamics create a compelling opportunity for investors to deliver much-needed new PBSA, in particular to target the growing domestic student population. The underlying student growth demonstrates the long-term demand for PBSA and underpins the attractiveness of investment in the sector.”

UK’s PBSA sector to grow by 7% this year, Savills finds

The European Living Investor Survey has found that two third of investors are looking to deploy more capital into PBSA, with one fifth expected to invest more than €500m (£435m) by 2025

Read Next

Scotland reports low commercial transactions of £250m in Q1

The Property Franchise Group appoints new non-executive director

Hilltop Credit Partners completes £19.6m regional homes funding

Colliers appoints new project management lead

Placefirst appoints new assets and strategy director

Scotland reports low commercial transactions of £250m in Q1

The Property Franchise Group appoints new non-executive director

Hilltop Credit Partners completes £19.6m regional homes funding

Colliers appoints new project management lead

Placefirst appoints new assets and strategy director

Purplebricks shareholders back sale to rival Strike

AJC Group submits planning application for Poole redevelopment

Scotland reports low commercial transactions of £250m in Q1

Border to Coast appoints Abrdn to support its UK real estate fund

JR Capital and Chancerygate acquire 12 industrial estate units

Read Next

Scotland reports low commercial transactions of £250m in Q1

The Property Franchise Group appoints new non-executive director

Hilltop Credit Partners completes £19.6m regional homes funding

Colliers appoints new project management lead

Placefirst appoints new assets and strategy director

Related Articles

Purplebricks shareholders back sale to rival Strike

AJC Group submits planning application for Poole redevelopment

Scotland reports low commercial transactions of £250m in Q1

Border to Coast appoints Abrdn to support its UK real estate fund

JR Capital and Chancerygate acquire 12 industrial estate units