With A-Level results now out, thousands of students across the country will be preparing to step into further education.
The UK continues to produce a steady stream of domestic university applications year-on-year, as well as an ever-increasing cohort of international students too. In a property market that has seen its share of challenges, student accommodation stands out as one of the few sectors showing consistent growth.
Although international student enrollment dipped slightly in 2023/24, the long-term trend remains upward. International students now account for roughly a quarter of all enrolments*, underscoring the urgent need for high-quality housing that can meet the demands of both domestic and overseas students.
Recognising the challenge of increasing bed availability and improving building standards, universities are increasingly partnering with private sector developers. With limited capacity to build, fund and manage accommodation themselves, institutions are turning to private developers and institutional investors to deliver purpose-built student accommodation (PBSA). These developments range from large-scale urban projects to smaller schemes in towns with expanding student populations.
There is a lot of appeal in this sector for investors. Unlike other residential asset classes, student accommodation provides relatively stable returns, with demand underpinned by predictable cycles of enrolment. While the broader property market is subject to volatility, student housing is somewhat insulated, supported by the enduring popularity of higher education and the scarcity of suitable accommodation in many locations.
The undersupply problem, which is particularly acute in major university towns, means occupancy rates for well-located PBSA developments are consistently high. For example, our latest report ‘Cities in focus 2025: Commercial property insights’ explores Birmingham, Manchester and Glasgow as cities where there is growing appetite for student housing. In Birmingham alone, 78% of UK investors, property professionals and developers said student housing or PBSA offered the best opportunity to achieve greater yields.
But beyond the numbers and returns, there is a human element to consider. For students, accommodation is more than just shelter, it’s their first experience of independence, a place to study, and a social hub; and poor housing can negatively affect wellbeing and academic performance. With tuition fees rising this autumn for the first time in eight years to a record £9,535*, and the cost of living continuing to climb, students and their families are becoming more discerning about both quality and affordability.
The evolution of student housing over the last decade has been stark. Gone are the days when draughty halls and tired terraces were the default. Today’s students expect en-suite bathrooms, fast broadband, shared social spaces, and increasingly, a focus on sustainability. Developers are responding with innovative designs that incorporate communal study areas, gyms, rooftop gardens and energy-efficient features. These touches not only appeal to students, but also help universities maintain their competitiveness in attracting both domestic and overseas applicants.
Of course, challenges remain. The cost of delivering high-quality PBSA has risen significantly, driven by inflation, materials shortages and stricter environmental standards*. This puts pressure on developers to balance the expectations of students with the need to keep rents affordable. Policymakers, too, are watching closely, as the risk of pricing students out of certain cities could have knock-on effects on access to education. Some argue that further regulation may be required to ensure accommodation remains within reach for all.
Nevertheless, the fundamentals of the sector remain strong. Student numbers are projected to grow steadily, particularly from international markets such as China, India and Nigeria. Not to mention an increasing number of US students looking abroad for more harmonious political-educational regulatory relationships.
The government’s recent announcement of an Oxbridge growth corridor highlights the UK’s renewed focus on education; with Rachel Reeves looking to create “Europe’s Silicon Valley” here on our shores. Incentives and investment like this will likely only further increase the number of students. Domestic demand shows little sign of waning, with record applications to UCAS in recent years and widening participation initiatives bringing more young people into higher education.
Numbers of international students are projected to grow steadily, particularly from international markets such as China, India and Nigeria. We must also now consider an increasing number of US students looking abroad for more harmonious political-educational regulatory relationships.
For commercial property investors there is a lot of opportunity; student accommodation will likely remain one of the most resilient corners of the property market for years to come. Specialist lenders such as Together will have a key role to play in refining their products for speed and flexibility. They will be able to facilitate the major projects required to meet the demand for student accommodation.
For students, this is more than just real estate, it’s providing a desirable home that shapes their university experience and future opportunities.
