Investment into UK purpose-built student accommodation (PBSA) assets rose 10% in 2025, according to Knight Frank’s latest Student Market Update.

In Q4, investors spent nearly £880m on PBSA assets, taking full‑year investment to £4.3bn – a 10% year-on-year increase and only slightly below the long‑run 10‑year average of £4.5bn. A total of 79 deals completed over the course of the year, representing a 20% increase on activity in 2024.

Single-asset operational stock accounted for the largest share of investor activity and 2025 also saw a resurgence in portfolio transactions and launches. In total, 13 portfolios traded, with five transactions of more than £200m completing.

Developers delivered 19,600 new PBSA beds across 64 schemes in 2025, a 20% uplift year-on-year. However, this figure is still below the five‑year pre-pandemic annual average of around 25,000 beds.

Merelina Sykes, joint head of student property at Knight Frank, said: “The PBSA sector continues to be an attractive asset class, and investment volumes in 2025 were supported by the return of portfolio level transactions, with core‑plus and value‑add investors increasingly focused on scale. But with operational opportunities finite, investors have explored alternative deployment routes, with a record number of funding deals and joint ventures taking place.

“The development landscape remains challenging with delays at the Building Safety Regulator due to Gateway 2, alongside planning and viability constraints – though there are signs these roadblocks are slowly easing.”

Katie O’Neill, associate in global living sectors research at Knight Frank, added: “While the sector continues to attract significant capital and benefit from strong underlying demand, the investment environment remains far from straightforward. Headline activity masks a market where deal timelines have prolonged due to pricing misalignments between vendors and purchasers, alongside challenging leasing conditions in some locations.

“Assets in Russell Group cities – or portfolios offering genuine value‑add opportunities through cap‑ex programmes – remain the first choice for investors. Yet, an attractive 10‑year gilt environment and share price declines among publicly listed sector participants have put returns into perspective for investors.”

Lisa Attenborough, head of Knight Frank capital advisory, said: “Lender appetite remains strong across both development and investment PBSA deals, with margins for operational assets currently around 160 bps. The living sectors continue to attract deep pools of capital, and that competition is translating into highly attractive pricing for borrowers.

“With debt supply at its highest level in more than a decade, now is a good time to borrow. Looking ahead, we expect margins to continue tightening on best‑in‑class opportunities through 2026. In addition, back‑leverage structures could be one to watch – with the cost of capital for debt funds falling, we anticipate the gap between bank and non‑bank lenders to narrow even further.”