Demand for purpose-built student accommodation returns

The purpose-built student accommodation (PBSA) sector has bounced back from a pandemic induced decline, according to recent reserach.

Property developer Stripe Property Group estimates the market size to be almost £4bn and suggests this will climb to £4.5bn by 2025. 

The PBSA specialist analysed the latest figures on the size of the sector, which supplies

stock to meet the overwhelming rental demand from the nation’s student population.

The latest figures show the current market size of the sector is an estimated £3.971bn, having increased by 67 per cent in the last decade from £2.4bn in 2013. 

The sector has bounced back from a pandemic decline in the size of the market seen in 2021. 

The PBSA sector had peaked to its highest point in 2020, with an estimated value of £4.1bn.

However, as the impact of the pandemic took hold, its market size plummeted by -21 per cent in a single year to £3.2bn.

This saw it reduced to its smallest level since 2016, driven by covid restrictions that prevented students from pursuing higher education in a physical format. 

However, the sector bounced back in 2022, with the estimated market size increasing by 23 per cent, although it sill remains four pre cent below its pre-pandemic peak. 

But Stripe Property Group estimates PBSA momentum will keep on building, climbing by a further 8.1per cent by 2025, with total market size hitting over £4.5bn. 

Managing Director James Forrester, says: “While pandemic restrictions were problematic for many areas of the UK property market, the PBSA sector was hit particularly hard by the almost immediate reduction in demand for student housing, as higher education was no longer pursued in a physical format. 

“This brought about a notable reduction to the market size of the sector and we’re still feeling the impact of this downturn today. 

“However, we are heading in the right direction and we predict that the impact of the pandemic will be nothing more than a memory by the end of this year.

“The returning health of the PBSA sector has been driven by a return to normality for many students and purpose built student accommodation is once again in very high demand. 

“We’ve seen the stories around the shortage of suitable accommodation to meet demand and so the vital role played by the PBSA sector is only going to grow in importance as the years go on.”