Why Purpose Built Student Accommodation Is On The Rise

Why Purpose Built Student Accommodation Is On The Rise

Purpose built student accommodation, otherwise known as PBSA, are definitely on the rise. The PBSA sector experienced growth of 37% since 2014 and a revenue of £42.5 billion as of 2017, making this the fastest growing asset in the UK property market. But just why is this type of student accommodation experiencing such a rapid rise in popularity?

Rise in Student Population

It is no secret that the student population within the UK is increasing, with UCAS recently reporting a 3% increase of applicants to higher education year on year, and a record number of young people being accepted onto courses in 2018. Over 564,0000 people applied to higher education in 2017, and with a high population comes a high demand for property.

Before purpose-built student accommodation began gaining momentum within the last 7 years or so, student property was mainly limited to university halls of residence or shared student housing. Today, with the PBSA market in full swing, students have the choice of staying in a fully furnished, modern apartment, fully equipped with everything they need. An increase in this type of accommodation isn’t only good news for students, but it means that the local housing market is more open to cater towards providing housing for families or young professionals.

The Rise of International Students

An influx of international students is a big reason behind the demand for purpose-built student accommodation. International students bring the UK economy around £20.3 billion on an annual basis. The academic year of 2016/17 saw approximately 450,000 overseas students enrolling in UK universities, resulting in a 5% increase compared to recent years.

Since many international students come from more affluent backgrounds, these types of students represent a big chunk of the PBSA target market. More luxury student apartments can have higher rental prices than others, leaving this type of accommodation more popular with students who have the appropriate financial means.

The Change in Attitudes towards Student Housing

Changing attitudes towards student accommodation are another reason why the PBSA market is thriving. Students are becoming much more selective on where they want to stay during their university years, less so than in the past when cost was the main deciding factor. Students are keen to rent properties in convenient locations close to their campus and the city centre, and favour useful amenities such as high-speed internet.

But what exactly does this growth in purpose-built student accommodation mean for property investors? As of 2018, student accommodation is one of the smartest investments you can make. Prices tend to be low with student properties, particularly in the year’s buy to let hotspot areas such as Liverpool and Manchester, whilst net rental yields are notoriously high. RW Invest are an example of a property investment company with great opportunities for student buy to let, offering the lowest priced student property in the UK from as little as £45,450 with an 8% net rental return.

Compared to more residential properties, student accommodation might also provide a higher possibility of long-term tenancy. Whilst residential tenants such as young professionals and families may be renting short term before buying a home of their own, students may be more likely to stay in the same property throughout the length of their studies. Paired with the overall high demand for purpose-built student accommodation, and a student population that’s only expected to grow, there’s plenty of evidence that now is a great time to invest.

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