The UK student housing sector is experiencing rapid growth, with private developers investing heavily in purpose-built student accommodation (PBSA). According to a report by Knight Frank, a record 22 land deals were signed in 2024, totalling £473 million (AUD $910 million). This surge in private investment highlights the increasing demand for modern student housing, despite recent declines in international student enrolments.
Private Developers Drive Student Housing Expansion
The latest report reveals that private developers are playing a major role in reshaping student housing across the UK. The demand for PBSA has been rising due to higher student enrolments and growing rental demand. Unlike traditional university-owned dormitories, private student housing offers modern amenities and premium facilities, making it an attractive choice for students.
Key Property Deals in 2024
Some of the most significant PBSA transactions in 2024 include:
- Greystar’s acquisition of a former hotel, now being redeveloped into One Medlock Street in Manchester, a 1,014-bed student accommodation.
- Dominus and Cheyne Capital’s conversion of an office block at 65 Fleet Street, central London, into student flats.
These deals highlight the trend of converting existing properties into high-density student housing, catering to the growing demand for quality accommodation.
High Demand and Rising Rental Prices
Despite stricter UK visa policies leading to a drop in international student numbers, the student housing market remains highly profitable. This is largely due to:
- High Rental Yields – Student accommodation provides strong returns for investors due to consistent demand and high-density developments.
- Rising Rents – The report found that private student housing rents are increasing at nearly twice the rate of university-owned accommodation.
According to official data, UK private rental prices increased by 9% in 2024, with student rents rising even faster in major university cities.
London Student Housing Costs Reach Record Highs
A separate analysis of student housing costs found that student rents in London have reached record levels:
- The average annual rent for private student housing in London for the 2024-25 academic year is £13,595 (AUD $26,170).
- This figure exceeds the maximum student loan available for students studying in the capital for the first time, highlighting affordability challenges.
With rising rents and growing student populations, affordable housing options remain a key concern for students in London and other major university cities.
University Partnerships with Private Developers
In addition to private acquisitions, universities are increasingly partnering with real estate developers to build student housing. These partnerships offer mutual benefits, including:
- Lower land costs for developers, making projects more affordable.
- Guaranteed occupancy for universities, as they direct students to private accommodations.
Such collaborations are helping address student housing shortages while providing modern, well-equipped living spaces for students.
The UK student housing market is thriving, with private developers investing a record £473 million in 2024 to meet growing demand. Despite fewer international students, the sector remains lucrative due to high rental yields and rising rent prices, particularly in major cities like London and Manchester.
As private developers continue to reshape urban skylines with purpose-built student accommodations, affordability remains a concern for students. University partnerships with developers may help ease these challenges, ensuring a steady supply of student housing in the coming years.