Knight Frank has reported that investment in the purpose-built student accommodation (PBSA) sector in Q2 2025 hit £830m.
This takes half year investment volumes to c. £1.6bn. The six-month total sits above the long-run average of £1.1bn, reflecting a healthy first half of the year.
“Latest June deadline data from UCAS points to a healthy intake of undergraduate students for the 2025/26 academic year (+1.3% applicant growth).
“Green shoots for the market in growth of international applicants (+2.2%), driven by Chinese applicants (+9.8%), but with less than 60,000 bedrooms presently under construction across the UK, the misalignment between demand and supply remains the crux of the market.”
Alistair Walters, Senior Research Analyst – Student Property, Knight Frank
The second half of the year is predicted to be even stronger than H1, with £2bn worth of PBSA schemes and portfolios currently on the market or under offer.
“Despite the healthy turnover achieved in Q2, the market has not been without its challenges. Significant delays at the Building Safety Regulator as a result of Gateway 2, planning challenges and high build costs are all having an impact on land sales and forward fundings.
“Appetite from investors has shifted to standing stock as a first preference. For these deals, fire safety is elongating deal times, while a later leasing cycle this year is contributing to a more cautious market particularly for stock in secondary locations.
“Prime assets in Russell Group cities, or assets and portfolios where investors can see a genuine value add opportunity, continue to attract high levels of interest and strong bidding activity.”
Merelina Sykes, Joint Head of Student Property, Knight Frank
Over 1,600 student bedrooms have been added to supply so far in 2025, with 17,802 expected to be delivered in time for the 2025/26 academic cycle. London, Nottingham and Leeds are expected to see the largest increases in supply.
“While the outlook remains far from certain given recent weaker economic data, further falls in the cost of debt have the potential to shift the investment and funding landscape.
“Financial markets are pricing in two further rate cuts in H2 2025 which will ensure that the all-in cost of debt for both operational assets and development finance become more competitive.”
Lisa Attenborough, Head of Debt Advisory, Knight Frank
