UK PBSA investment hit £4.3bn in 2025

Investment into the UK’s purpose-built student accommodation (PBSA) sector climbed to £4.3 billion in 2025 as institutional appetite for the asset class remained strong.

Research from global property consultancy Knight Frank says that’s a 10% annual rise and nearly £880 million was invested in the final quarter.

The firm’s latest Student Market Update reveals that yearly volumes are close to the long-run 10-year average of £4.5 billion.

There were 79 PBSA transactions completed last year, up 20% on 2024.

PBSA is attractive

The firm’s joint head of student property, Merelina Sykes, said: “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.

“But with operational opportunities finite, investors have explored alternative deployment routes, with a record number of funding deals and joint ventures taking place.”

She added: “The development landscape remains challenging with delays at the Building Safety Regulator due to Gateway 2, alongside planning and viability constraints – though there are signs these roadblocks are slowly easing.”

Large portfolios sell

The data shows that operational single-asset deals continue to dominate the sector though 13 portfolios did change hands.

Five of these deals were worth more than £200 million, underlining the demand from investors for larger portfolio deals.

Builders completed 19,600 new beds in 64 schemes, a 20% increase year-on-year.

However, supply remains below the pre-pandemic five-year average of around 25,000 units annually.

PBSA bed pipeline

Knight Frank says that London led construction output with 4,350 beds being delivered, with Nottingham following with 2,550, while Leeds added 1,900.

Nationwide, 50,250 beds are currently under construction, which points to a sizeable future pipeline despite planning and regulatory friction.

The PBSA sector is helped by strong student tenant demand and by the January UCAS deadline, universities had received a record 619,360 applications for the 2026/27 academic year, a 3% increase.

Domestic applicants accounted for 494,540, also up 3%, while international demand rose faster, climbing 5% to 124,830.

However, patterns within that growth reveal shifting student preferences with applications to higher-tariff universities rising to 43% of the total, up from 39% in 2019.

Annual growth reached 6% in this segment, compared with 1% at middle-tariff institutions and a 1% decline among lower-tariff providers.