Jerald Solis, Director, Experience Invest
The UK stands out as a leading provider of higher education, accommodating some of the world’s top ranked universities.
The most recent 2019 QS World Rankings saw UK universities
secure five of the top 20 places. What’s more, British universities also took
first place in 13 out of 48 subject rankings, demonstrating the country’s
expertise across a spectrum of disciplines.
It should come as no surprise then that undergraduate and
post-graduate students from all around the world are readily flocking to UK
universities. According to UCAS, over 500,000 international students study in
the UK every year. Coupled with high numbers of domestic students, this means
there is consistently high demand for suitable, term-time accommodation in
university cities and towns.
Over the years, student accommodation has become a leading asset
class for domestic and international property investors, yet for those who are
unfamiliar with the market, student accommodation can seem overwhelming and
complex. So, for buy-to-let investors keen to pursue new opportunities in this
market, what are some of the factors to bear in mind?
What is PBSA?
Of the two most common forms of accommodation that students
studying away from home might consider, Purpose-Built Student Accommodation
(PBSA) might not be as familiar as traditional, private rented accommodation.
Unlike the latter, PBSA is built specifically to suit the
particular needs of today’s students. It typically refers to one or more blocks
of flats that are complete with other facilities to service the student
tenants, such as laundrettes and catering.
In 2017, the UK PBSA market was estimated by Knight Frank to be
worth £46 billion; but importantly, this number is growing. To meet the demand
for bed spaces, the provision of PBSA is also on the rise – some 11,000
purpose-built student bedrooms are due to be delivered in the 2019/2020
So how are investors responding to the flourishing market?
According to a recent independent survey commissioned by Experience Invest,
there is strong appetite for this type of property; in fact, almost one in four
(24%) of the 500+ property investors polled said they were considering investing
into student property in 2019.
What to consider when choosing
to invest in a PBSA
For those considering investing in PBSA, there are a number of
key factors to consider – namely, location, and the quality of amenities.
As with any property, the location is often key to a successful
investment. And with student property, there are certainly a number of key
hotspots that offer promising potential.
For one, investors should keep an eye on towns and cities
boasting two or more well-regarded universities. Otherwise known as mature
markets, these locations are typically home to a large student population.
Examples of mature markets include Liverpool and Newcastle,
where investors can find opportunities like Aura Student Liverpool and Opto
Student Newcastle. These contemporary new-build developments offer high-quality
facilities that cater to the diverse needs of the modern student.
However, it’s not just the city or town itself that is
important. The location of PBSA is also extremely significant. Not only should
they be within close proximity to university grounds, they also need to cater
to the lifestyle needs of students. This means having close access to things
like bars, restaurants, cafes and parks.
We must remember that student demands for accommodation are not
what they were 20, or even 10 years ago. As a result, PBSA need to house the
facilities and amenities that reflect modern student demands.
Developments that offer residents contemporary living facilities
like gyms, laundrettes, and even games rooms are likely to draw students
looking for the convenience of on-site amenities. Particularly with a growing
emphasis on maintaining a healthy lifestyle, many students will be looking for
these ‘extras’. A survey of UK-based students by SPCE uncovered that the
average spend on monthly gym memberships now far outstrips the money spent on
alcohol. Furthermore, fast, reliable Wi-Fi is now a necessity in any student
Finding a PBSA that appeals to the modern student does not need to be complicated if investors know where to look. Meanwhile, with a strong pipeline of developments in the works, the options for those considering investing in the student property market are steadily expanding, with some exciting opportunities on offer across the country.