With rising demand for higher education, JLL forecasts full-time student numbers to grow by a further half a million by 2030. Purpose Built Student Accommodation (PBSA) has become a lucrative ticket for real estate investment and according to JLL’s Student Housing Report investor appetite remains robust due to its defensive, income-producing characteristics. Looking forward there will be a number of challenges including a fall in development pipelines and growing rent affordability concerns.
Within the wider real estate sector, PBSA now represents one of the standout markets, with 31% to be invested in the sector of the £8.8bn of additional investment into Living sectors expected over the next two years. With growth in supply having accelerated over the past five years, this is set to slow and forecast demand growth will widen the gap between available beds and total numbers.
JLL forecasts a 27% rise in full-time students in the next decade which is the equivalent of an additional 40,000 students per year. However, the number of developments being completed is slowing and current development pipelines for 2019/20 report just 26,610 new beds. This challenge is exacerbated by rising construction costs, which have in part contributed to a 25% fall in construction levels over the last three years.