New data from global property consultancy Knight Frank reveals a significant opportunity for investors and universities to upgrade and reposition older stock, delivering value and meeting the evolving needs of students. Collaboration between universities and private-sector providers will be critical to addressing this challenge.
It comes as Knight Frank has released its first NextGen Living 2025 report – a comprehensive report based on insights from 56 institutional investors managing £60bn in UK living sectors assets.
Across the UK, 65% of existing PBSA homes were built before 2012 – creating a two-tier market in terms of quality, Knight Frank says.
An imbalance between new supply and demand is exacerbating this trend, with 260,000 new student beds having been added to supply since 2012, compared with growth in full-time university students over that same time of almost 470,000 – intensifying the demand for modern, high-quality accommodation.
“At a time when university finances are increasingly stretched, partnerships between universities and the private sector can help address these challenges.
“Ultimately, insufficient or unsuitable accommodation constitutes a risk to university reputations, and student recruitment.”
Matthew Bowen, Global Head of Living Sectors Research, Knight Frank
The research found that accommodation availability is a crucial factor in students’ university choices, with nearly two-thirds of applicants saying it influenced their decision on where to apply to study.
Student satisfaction with accommodation options also remains a concern, with the research highlighting that under 70% of students believed there were enough options in their chosen city.
“Accommodation forms a key part of a university’s offer to incoming students, both domestic and international. Our Student Accommodation Survey undertaken in partnership with UCAS revealed that nearly half of applicants start researching their housing options before formally applying to university. This underscores the importance of getting it right – not just to drive lease-up and occupancy but to support sustainable rental growth. In today’s competitive market, upgrading and maintaining existing stock is more important than ever.
“As we look ahead to 2025, more opportunities for collaboration will emerge. By working together, universities and investors can create a pipeline of modern, sustainable accommodation that meets the needs of a growing and diverse student population.”
Merelina Sykes, Joint Head of Student Property, Knight Frank
Knight Frank estimates the current value of the PBSA market to be £89bn and the current market value of the living sectors has now reached £212bn.
Investors ranked student housing as the second most appealing real estate asset class over the next five years – just behind Build to Rent but ahead of other high growth sectors including seniors housing, logistics and data centres.
