Student numbers are projected to rise 10% by 2030/31, adding 2 million to the housing demand, according to government forecasts. International student enrolment increased 12.4% in 2022/23, further straining accommodation needs.

Supply Shortage

The UK faces an estimated shortage of 620,000 PBSA beds in 2025, based on current construction rates and student population projections. The 20 largest student cities require approximately 230,000 additional beds to meet current demand levels.

Across major UK student markets, there are 2.7 full-time students for every available PBSA bed, according to a recent industry report. This imbalance is driving rental growth and attracting both domestic and international investors.

Market Growth

The PBSA sector is expected to reach £4.5 billion in size by the end of the year, reflecting strong market fundamentals, according to real estate consultancy JLL. Record-high occupancy levels and strong rental growth characterize the current market conditions.

Development Challenges

Developers face significant hurdles in bringing new supply to market. Rising build costs, planning system barriers, and increasing operational expenses are slowing down new PBSA development.

The planning process remains a major bottleneck, with projects frequently delayed by months or years, which exacerbates the supply shortage.

Regional Challenges

Investors must consider location-specific factors, as supply-demand dynamics vary considerably between cities and regions. London, Manchester, and Edinburgh show particularly acute shortages, while some smaller university towns have a more balanced market.

Alternatives

With new construction challenging in some areas, alternative development strategies are emerging. These include repositioning legacy PBSA and converting offices to student accommodation.

Increased interest exists in office-to-student housing conversions as a way to bring new supply to market more quickly, especially in city centre locations.

Sustainability Focus

Eco-friendly developments are increasingly important to environmentally conscious students and investors alike. New projects often incorporate sustainable features to meet this demand and comply with tightening regulations.

Market Outlook

Despite the strong fundamentals, experts caution that the PBSA market is not without risks. Changes in higher education policy, shifts in international student preferences, or broader economic downturns could impact the sector's growth trajectory.

The sector's growth reflects the UK's strong position in higher education but also highlights infrastructure challenges as student populations continue to expand. As universities and cities grapple with these issues, the PBSA sector is likely to remain a focus for investors and policymakers alike in the coming years.

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