The UK PSBA market growth has shrunk to 2.6% in 2020, with 25,000 new beds added to the market in 2020 compared to 36,000 new beds in 2019, according to new data from StuRents.
The demand for student beds at higher tariff universities has increased by 12.1% in 2020 compared to 1.3% for medium and 0.3% for lower traffic institutions.
In its annual report StuRents found that the number of private PBSA beds has surpassed the number of university-supplied beds ever, but that houses in multiple occupation (HMOs) still dominate the student accommodation market, constituting to 55% of all student beds. Average rents have increased by 3.5% to £101/ week in 2020. In the PBSA sector rents have increased by 2.1%, equating to £175/week.
Head of research at StuRents, Richard Ward, said: “While the student accommodation market started the year on a high, the uncertainty that came with the Covid-19 pandemic has not shifted the long-term market fundamentals, as the UK PBSA market continues to grow albeit as a slower rate than in previous years.
“The HMO market has been largely insulated from the pandemic due to its early lettings cycle, whilst UK PBSA has faced challenges due to travel restrictions and the uncertain conditions facing students due to Covid-19. However, as shown by the last recession, demand is likely to remain strong as students look to invest more and more in their education when faced with a difficult jobs market. Yet, with demand greater for higher tariff institutions, we are seeing a widening multi-tiered market and thus investors’ interests are still being piqued by the very best locations at renowned institutions.
“Nevertheless, the suitability of an investment should not hinge on broad market analysis or institutional reputation alone, with sophisticated investors starting to realise they must evaluate the granular, local conditions to ensure an appropriate product fit, rather than relying on national trends.”