Investment in the UK’s purpose-built student accommodation (PBSA) sector reached £830m in the second quarter of 2025, according to a new report from Knight Frank – a clear signal of continued confidence in the student housing market.
This takes total investment for the first half of the year to approximately £1.6bn, significantly ahead of the long-run average of £1.1bn, and pointing to a robust and resilient market performance.
Knight Frank’s data suggests the second half of the year could be even more buoyant, with an estimated £2 billion worth of PBSA schemes and portfolios currently on the market or under offer. If those deals progress as expected, 2025 could prove to be a standout year for PBSA investment volumes.
Strong investor appetite is being driven by several key factors, including a return to full in-person university attendance, continued growth in domestic and international student numbers, and the relative resilience of the sector compared to other real estate asset classes. The sector also offers compelling long-term returns, underpinned by structural undersupply in many university towns and cities.
So far in 2025, over 1,600 new student beds have been added to the national supply. By the start of the 2025/26 academic year, a further 17,802 beds are expected to be delivered. The cities projected to see the largest increases in new supply include London, Nottingham, and Leeds—locations with consistently high student populations and strong university infrastructure.
Despite the positive momentum, demand for PBSA continues to outstrip supply, especially in major urban centres. This supply-demand imbalance has resulted in rising rental values and high occupancy levels, further strengthening the investment case.
The growing popularity of PBSA as a stable, long-term investment is also attracting a wider range of capital sources, including overseas institutions, pension funds, and private equity firms—all keen to tap into a market characterised by high demand, predictable income, and inflation-linked rental growth.
With market activity accelerating and a strong pipeline for the remainder of the year, 2025 is shaping up to be a very active year for UK PBSA investment.
Alistair Walters, senior research analyst for student property at Knight Frank, said: “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 beds presently under construction across the UK, the misalignment between demand and supply remains the crux of the market.”
Merelina Sykes, joint head of student property at Knight Frank, commented: “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.”
“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,” Sykes added.
