UK: Around £830 million was invested in the UK purpose build student accommodation (PBSA) market in Q2 2025, according to a new report by global property consultancy Knight Frank.
This takes half-year investment volumes to around £1.6 billion, above the long run average of £1.1billion, reflecting a healthy first half of the year.
Knight Frank says the second half of the year is predicted to be stronger than H1, with £2 billion worth of schemes and portfolios currently on the market or under offer.
More than 1,600 student beds have been added to the supply pool so far in 2025, with 17,802 expected to be delivered in time for the 2025/26 academic year. London, Nottingham and Leeds are expected to see the largest increases in supply.
Alistair Walters, senior research analyst for student property at Knight Frank, said: “Latest June deadline data from UCAS points to a healthy intake of undergraduate students for the 2025/26 academic year (+1.3% applicant growth). Green shoots for the market in growth of international applicants (+2.2%), driven by Chinese applicants (+9.8%), but with less than 60,000 beds presently under construction across the UK, the misalignment between demand and supply remains the crux of the market.”
Merelina Sykes, joint head of student property at Knight Frank, added: “Despite the healthy turnover achieved in Q2, the market has not been without its challenges. Significant delays at the Building Safety Regulator as a result of Gateway 2, planning challenges and high build costs are all having an impact on land sales and forward fundings. Appetite from investors has shifted to standing stock as a first preference. For these deals, fire safety is elongating deal times, while a later leasing cycle this year is contributing to a more cautious market particularly for stock in secondary locations. Prime assets in Russell Group cities, or assets and portfolios where investors can see a genuine value add opportunity, continue to attract high levels of interest and strong bidding activity.”
Lisa Attenborough, head of debt advisory at Knight Frank, said: “While the outlook remains far from certain given recent weaker economic data, further falls in the cost of debt have the potential to shift the investment and funding landscape. Financial markets are pricing in two further rate cuts in H2 2025 which will ensure that the all-in cost of debt for both operational assets and development finance become more competitive.”
Highlights:
• £830 million was invested in the UK PBSA market in Q2 2025, according to Knight Frank
• This takes half-year investment volumes to around £1.6 billion, above the long run average of £1.1billion
• The second half of the year is predicted to be stronger than H1, with £2 billion worth of schemes and portfolios currently on the market or under offer
• More than 1,600 student beds have been added to the supply pool so far in 2025, with 17,802 expected to be delivered in time for the 2025/26 academic year
