Knight Frank has launched its latest UK Student Accommodation Outlook report, examining investment trends, policy risks, and rental dynamics.
According to the agency, investment in the UK’s Purpose-Built Student Accommodation (PBSA) sector has reached £50 billion over the past decade, underscoring the sectors resilience and ongoing appeal to institutional investors.
The third quarter of 2025 marked a strong period, with £1.83 billion transacted – the highest Q3 volume on record. Year-to-date investment now stands at approximately £3.4 billion, a 3% increase compared to the same period in 2024.
Merelina Sykes, Joint Head of Student Property at Knight Frank says: “While the headline figures point to a liquid market, the underlying dynamics reveal a more complex picture, with transaction timelines having lengthened in some cases. Investors have a clear appetite for first-generation standing stock with value-add potential – though fire safety remediation, leasing cycle delays, and operational complexities have contributed to slower deal times.”
Single asset operational stock accounts for the largest share of investor activity so far this year, with 27 assets sold but there has been a resurgence in portfolio transactions in 2025. In total, eight portfolios have traded over the year-to-date.
A preference for portfolios reflects investor appetite for scale across core-plus and value-add platforms, even amid a more challenging letting environment for the 2025/26 academic year.
Rental growth returns to trend Knight Frank’s Student Property Rental Index reveals that average rental growth across all room types slowed to 2% in 2025/26, down from a peak of 8.3%. This moderation signals a return to long-term trends of 2–3% annual growth, aligning with CPI targets and reflecting a more price-sensitive student base.
Katie O’Neill, Global Living Sectors Research comments: “For the first time in our rental index, university-operated accommodation outperformed private PBSA. University-owned stock saw rents rise by 4.8%, compared to just 0.3% for private direct-let assets. While it is true that some trends of weaker occupancy emerged again this year, other factors – outside of the real rental levels – that are impacting lease up and retention include brand loyalty and hands on asset management.”
Of the 64 locations tracked, 23 recorded rental growth above CPI (+3.8%), while 31 saw sub 4% growth and 10 markets experienced flat or negative growth.
O’Neill adds: “The importance of ensuring a wide range of accommodation options, spanning affordable and mid-market options, is further reinforced when it comes to deciding where to study.”
According to the Knight Frank Student Accommodation Survey, conducted in partnership with UCAS, 81% of applicants began researching housing options before receiving a university offer. Nearly a fifth explored accommodation before even deciding where to apply.
Now in its sixth year, the survey confirms that housing is a core consideration in the university selection process. Students are influenced by cost, quality, inclusion of bills, and available facilities. Concerns about affordability and supply remain high, with 44% of applicants worried about finding accommodation within budget and 30% concerned about availability in their chosen location.
