It has recovered from its pandemic low point
The purpose-built student accommodation (PBSA) sector now has an estimated market size of almost £4 billion and is forecasted to grow further to £4.5 billion by 2025, based on research from property developer and PBSA specialist Stripe Property Group.
The latest figures show that the current market size of the sector is an estimated £3.97 billion, having increased by 67% in the last decade from £2.4 billion in 2013 and bouncing back from a pandemic decline in the size of the market seen in 2021.
The PBSA sector had peaked at its highest point in 2020, with an estimated value of £4.1 billon, but the COVID-19 pandemic deflated the market size of the PBSA sector, plummeting by 21% in a single year to £3.2 billion in 2021. Stripe said this decline to the market’s lowest level since 2016 was driven by pandemic restrictions that prevented students from pursuing higher education in a physical format.
However, the sector bounced back in 2022, with its estimated market size increasing by 23%, although it remains 4% below its pre-pandemic peak.
The latest forecast from Stripe Property Group suggests that the pandemic impact could be erased this year, with the PBSA sector predicted to hit £4.2 billion in market size in 2023, an annual increase of 6% and 2% above its pre-pandemic peak. Stripe also estimates that PBSA momentum will keep building, climbing by a further 8.1% by 2025.
“While pandemic restrictions were problematic for many areas of the UK property market, the PBSA sector was hit particularly hard by the almost immediate reduction in demand for student housing, as higher education was no longer pursued in a physical format,” James Forrester (pictured), managing director at Stripe Property Group, said. “This brought about a notable reduction to the market size of the sector, and we’re still feeling the impact of this downturn today.
“However, we are heading in the right direction, and we predict that the impact of the pandemic will be nothing more than a memory by the end of this year. The returning health of the PBSA sector has been driven by a return to normality for many students, and purpose-built student accommodation is once again in very high demand.
“We’ve seen the stories around the shortage of suitable accommodation to meet demand, and so the vital role played by the PBSA sector is only going to grow in importance as the years go on.”
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