Fewer than 17,500 new purpose-built student beds are expected to be added in the coming academic year, representing only 0.6% growth.

Only 60 PBSA (purpose-built student accommodation) developments will be completed compared with double that a decade ago, according to Knight Frank’s UK Student Housing Market Update. Leeds saw the largest number of new deliveries with 3,400 beds delivered so far in 2024, followed by London (2,800), and Nottingham (2,300).

This is despite investment in PBSA topping £2.45 billion in the first half of 2024, significantly higher than the £1.1 billion invested in the sector for the same period last year.

Last decade

Knight Frank reports that only 258,000 new PBSA beds have been added to supply over the last decade, accounting for 35% of total stock. That means that 65% of existing PBSA supply in the UK was built pre-2012. Rising build and site costs, skills and labour shortages, higher financing costs, and tricky-to-navigate planning policy all represent notable headwinds that have contributed to a slowdown in delivery, which has come despite growth in student numbers.

The total pipeline of student beds across the country now stands at approximately 160,000, with 22% currently under construction. An additional 49%, representing 78,000 beds, have secured full planning permission.

Clear guidelines

Nottingham Council recently announced its plan to get more students living in purpose-built student accommodation instead of HMOs by promoting purpose-built blocks.

Merelina Sykes, joint head of student property at Knight Frank, says the UK student accommodation sector is resilient and attractive. “Despite economic headwinds and pre-election market caution, investors recognise the compelling long-term value proposition of student accommodation, particularly in a market where demand continues to outstrip supply,” she adds.

With high demand from students and supply not keeping pace, rental growth for the sector remains elevated, averaging 7.6% across the UK in 2024.

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