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Our latest NextGen Living Survey shows that over two-thirds of existing purpose built student accommodation (PBSA) were built before 2012, representing thousands of beds in prime locations that no longer meet the needs of today’s students. For many in the industry, this aging inventory represents one of the most compelling value-add plays in the broader living sectors. 

Neil Armstrong and Merelina Sykes, Joint Heads of Student Property, explain more.

Q: How have market conditions changed to encourage PBSA repositioning strategies?

NA: Several factors have aligned to create a perfect storm for PBSA repositioning. University enrolment has expanded by nearly half a million students since 2012, while bed stock has increased by only around 260,000 units over the same period.

The shortfall this has created has ramped up demand for better quality accommodation – with developers focusing on communal areas, better amenities, and lifestyle-focused designs. This has effectively created a two-tier market where older properties, despite often having better locations, struggle to command premium rents.

However, new developments are being hampered by increased regulatory complexities, which are significantly impacting project timelines, making repositioning a more attractive option: many upgrade and improvement projects fall under permitted development rights or have more streamlined planning procedures.

Q: What do the most successful repositioning strategies look like?

MS: It’s not just about cosmetic refreshes. The properties we’re seeing that have had the best rental uplifts have undergone complete transformations – creating community-focused environments that have become central to student accommodation marketing. With almost two-thirds of prospective university students now factoring accommodation availability and quality into their application choices, the return on investment for those who meet the needs of the student population can be significant.

Q: Does location play a part in the success of a development?

NA: Absolutely. One of the most compelling aspects of targeting pre-2012 PBSA stock is location. Many of these properties sit on prime sites – close to city centres or campuses - that would be difficult to secure for new developments today. 

MS: The locational advantage, combined with the opportunity to upgrade specifications, creates a strong value proposition. Investors can acquire assets with established rental histories and solid fundamentals, then enhance them to compete with newer stock while maintaining the affordability that remains crucial for domestic students. 

Q: What advice would you give investors in today’s PBSA market?

NA: Transaction activity in the PBSA sector has remained strong, despite broader economic uncertainties, with volumes increasing by 13% year-on-year. This momentum reflects investor confidence in the sector’s fundamentals and the attractive risk-adjusted returns available through well-executed repositioning strategies. Investors should consider looking at cities with growing student populations and constrained supply for good repurposing opportunities.

MS: PBSA is a resilient sector, with student demand continuing to grow. So, for investors looking for both scale and returns in the living sectors, repurposing offers a compelling alternative to the red tape faced by many investors and developers. As the student accommodation sector continues to mature, the repositioning opportunity represents a strategic response to changing market dynamics that could define the next phase of PBSA investment activity.

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To find out more about how we work with clients in the PBSA sector, get in touch with our team.