Understanding Global Demand for PBSA Market

Purpose-built student accommodation is no longer considered a niche market. It's a rapidly growing real estate powerhouse attracting property operators and investors seeking stable returns and long-term growth.

The PBSA market growth is driven by a combination of demographic shifts, globalisation of education, urbanisation, and changing student preferences towards managed and amenity-rich living spaces. As property operators and investors, understanding these dynamics is crucial to capitalising on the opportunities PBSAs present.

Growth of PBSA Market in a Global Context

#1. UK PBSA Market

The UK has long been a leader in the PBSA student accommodation market, be it the existing infrastructure or its consistency in high rental yields. As per Colliers, the number of PBSA beds in the UK is projected to rise to 827,000 by the year 2026. This is a fairly high jump from 712,000 beds in 2022, indicating upward growth in accordance with the growth in demand for PBSAs in the residential real estate sector.

Even the value of the PBSA sector in the UK shows a significant appreciation, standing at £85.8 billion in 2023 to an estimated £104 billion by 2028 (Source: PBSA News). This reflects both the sector's resilience and the strong investment potential.

#2. US & Australia PBSA Market

Educational hubs like the United States and Australia are not that far behind in their growth potential for the PBSA market. These countries are leveraging their strong educational systems and flexible visa policies to attract international student inflows to fuel the expansion of PBSA offerings.

Student housing PBSA projects in key regions in the US have a total valuation of $672.8 million, showcasing the high growth of this sector, as per a recent report by amber on “US International Student Housing Annual Report 2023-24”. Moreover, around 8,000 rooms could be delivered in Australia between 2023 and 2026, according to CBRE. This represents a 7% uplift from the current volume available for the current student population.

Understanding the Demand Drivers

The global student population is the primary driver for the rising demand for high-quality housing. There are also other elements that can equally influence the growth of the PBSA market. Here are some key factors:

1. Demographics & education: The current generation places great importance on creating connections and embracing diverse cultures. Increasing disposable incomes in developing countries pave the way for higher education, particularly international education. This assists in creating a major market for the PBSA market to flourish in upcoming years.
2. Market dynamics & investment flows: The global sector attracts considerable capital from investors, pension funds, and REITs. This financial surge further solidifies the confidence in the long-term growth opportunity of the PBSA student accommodation market.
3. Regulatory environment: The government is taking note of the situation and making policies that promote international education and student mobility. This impacts the major growth of the student housing industry, especially a well-organized purpose-built student accommodation sector.
4. Seasonal countercyclical in PBSA: Unlike many other real estate sectors, the demand for student housing remains stable and even increases during economic downturns. This helps to provide a cushion against broader market volatility, making PBSA an attractive option for risk-averse investors.

Trends Impacting the PBSA Market

The student accommodation market is an ever-evolving sector. It constantly adapts to meet the changing needs and preferences of students. As purpose-built student accommodation continues to gain traction, an understanding of future trends can help familiarise the industry better:

1. Technological innovations: Advancements in technology are reshaping the PBSA market, from integrating smart building solutions to introducing digital platforms for community engagement. Embracing these innovations can enhance operational efficiency and student satisfaction.
2. Sustainability practices: Sustainability has become a key consideration for students and investors alike. Implementing green building practices and sustainability initiatives can differentiate PBSA offerings and align with broader environmental goals.
3. Evolving student accommodation: As student preferences evolve, so too must PBSA offerings. Flexibility, connectivity, and community-building are increasingly valued, guiding the development of future PBSAs.

Strategic Recommendations for Student Housing Businesses

A strategic approach is required to enter or expand within a market. Best practices include conducting thorough market analyses, understanding student demographics, and aligning offerings with student needs and preferences.

Risk management as well as mitigation strategies are crucial for understanding market uncertainties. Marketing and branding efforts should align with the unique value propositions of PBSA market offerings. To attract a global student population, operators must also consider the cultural and lifestyle needs of the target audience.

As the global demand for PBSA increases, property operators and investors can explore this dynamic sector for growth and expansion. If you have a student housing property portfolio that’s ready for move-ins, you can maximise revenue generation by listing your property with amber.