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PBSA is set to be the investment of choice for the 2020s

PBSA is set to be the investment of choice for the 2020s

The past decade has seen purpose-built student accommodation (PBSA) go from strength-to-strength and now, the sector has overtaken university-owned accommodation and accounts for over half of student beds in the UK. In the past ten years, investment into PBSA has proved to be extremely prosperous - in research carried out by Knight Frank last May, it was revealed that investment into PBSA reached a record high of USD $16.3 billion which surpassed the previous high of USD $15.9 billion in 2017.

For the first time in history, purpose-built student beds are now dominating the market. Research carried out by JLL found that the number of university-owned student beds have only grown by six per cent since the 2014/15 academic year and out of the 331,000 privately-owned student beds in the UK, only 91,000 are leased to universities with the rest being directly let out by landlords. It also looks like the need for PBSA is only going to increase in the next decade - JLL found that a further £8.8 billion will be invested in the UK PBSA sector. They also predicted that the demand for student accommodation will also grow further with the UK seeing a 27% increase of full-time students over the next 10 - this equates to around an extra 40,000 students per year. In addition to this, the number of developments in the UK reaching completion is slowing down and at the current rate, there will only be 26,610 new student beds delivered in the current academic year. This slow-down in supply means that PBSA will play a crucial role in housing the growing number of students.

Huw Forrest, director of Living Capital Markets, Student Housing at JLL, said: “Student housing has become one of the most standout performers for investors in the commercial and living sectors and the overall outlook in the UK remains positive. JLL forecast an increase of 500,000 full-time students by 2030, supported by a government targets for 35% increase in international numbers. Home to 18 of the world’s top 100 universities, the sector has a bright future ahead, but investors need to focus on the right investment and development decisions.”

The outlook for the Purpose-Built Student Accommodation market for the next 10 years is very bright. Investors need a stable long-term investment in the current volatile economic climate and with the student market now relying heavily on the private sector, PBSA will provide the stability investors are looking for.

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