Unlocking value in aging PBSA assets
The repositioning opportunity
With 65% of the UK’s purpose-built student accommodation (PBSA) constructed before 2012, repurposing existing stock presents one of the most compelling investment opportunities in today’s living sectors. While some newer developments face planning hurdles and construction delays, the strategic repositioning of older assets could be a prudent approach for investors seeking both scale and returns in this resilient sector. Pre-2012 PBSA stock largely sits in prime locations yet lacks the amenities and specifications that today’s students have come to expect from their accommodation. Communal spaces and modern amenities started to become popular from around 2015, creating a stark contrast between older and newer stock and this unique two-tier market presents a natural value-add opportunity. The case for repositioning is further strengthened by the widening supply-demand imbalance. Nearly 470,000 new students have been added to the UK university population since 2012, but only about 260,000 new beds have been added during that same period. Despite broader economic headwinds, the attraction of the supply-demand imbalance to investors has helped pushed transaction volumes up 13% year-on-year.
The repositioning opportunity
With 65% of the UK’s purpose-built student accommodation (PBSA) constructed before 2012, repurposing existing stock presents one of the most compelling investment opportunities in today’s living sectors.
While some newer developments face planning hurdles and construction delays, the strategic repositioning of older assets could be a prudent approach for investors seeking both scale and returns in this resilient sector.
Pre-2012 PBSA stock largely sits in prime locations yet lacks the amenities and specifications that today’s students have come to expect from their accommodation. Communal spaces and modern amenities started to become popular from around 2015, creating a stark contrast between older and newer stock and this unique two-tier market presents a natural value-add opportunity.
The case for repositioning is further strengthened by the widening supply-demand imbalance. Nearly 470,000 new students have been added to the UK university population since 2012, but only about 260,000 new beds have been added during that same period. Despite broader economic headwinds, the attraction of the supply-demand imbalance to investors has helped pushed transaction volumes up 13% year-on-year.
Going beyond cosmetic improvements
Successful repositioning of PBSA stock goes beyond simple cosmetic improvements. Those schemes that have had their value unlocked have been completely reimagined to create the community environments modern students prioritise. According to Knight Frank’s nationwide survey of students, conducted in partnership with the admissions body UCAS last year, nearly two-thirds of university applicants reported that accommodation availability influenced their application decision.
For investors, the opportunity is clear: acquire aging PBSA assets, often in prime, on-campus locations, then transform them to meet the contemporary expectations of today’s modern students. This approach can deliver beds at scale while maintaining the affordability that remains paramount to students, especially domestic ones.
A backdrop of regulatory challenges
Repositioning strategies have gained additional appeal as new developments face mounting challenges. The constant evolution of building regulations has complicated development timelines, and what should be a 13-week process for regulatory approval can stretch to months or even a year. Delaying a project completion, sometimes by an entire academic year, can have critical consequences in a sector where timing is essential.
By contrast, repositioned assets often face fewer regulatory hurdles, yet still deliver substantive improvements in the quality and level of amenities provided.
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The strategic partnership model: a win / win
The most successful repositioning projects often involve collaboration between universities and private investors. Universities hold valuable land and possess detailed data on student demographics and housing requirements. Meanwhile, private investors bring much-needed capital and a wealth of operational expertise.
This strategic partnership model reduces the risk for investors, while simultaneously helping universities to enhance their accommodation offerings without diverting resources. As university finances remain under significant pressure, outsourcing accommodation requirements to the private sector help these educational institutions focus on core competencies.
A prime example is Unite Group's partnership with Newcastle University at Castle Leazes, where 1,200 outdated beds are being replaced with 2,000 modern ones. This arrangement is a win win: students receive higher-quality accommodation, the university secures appropriate housing that enhances its recruitment appeal, and Unite achieve greater certainty with reduced risk.
The strategic partnership model: a win / win
The most successful repositioning projects often involve collaboration between universities and private investors. Universities hold valuable land and possess detailed data on student demographics and housing requirements. Meanwhile, private investors bring much-needed capital and a wealth of operational expertise.
This strategic partnership model reduces the risk for investors, while simultaneously helping universities to enhance their accommodation offerings without diverting resources. As university finances remain under significant pressure, outsourcing accommodation requirements to the private sector help these educational institutions focus on core competencies.
A prime example is Unite Group's partnership with Newcastle University at Castle Leazes, where 1,200 outdated beds are being replaced with 2,000 modern ones. This arrangement is a win win: students receive higher-quality accommodation, the university secures appropriate housing that enhances its recruitment appeal, and Unite achieve greater certainty with reduced risk.
Resilience and returns
As we progress through 2025, the sector appears well-positioned for another year of solid investment; £744 million was invested in the UK PBSA market over the first three months of 2025, putting volumes in line with the same period last year. Meanwhile, the demand from both domestic and international students continues to grow, with applications from China up by 9% and applications from the US up by 12%.
For investors, there are two clear investment approaches: prime, modern assets in strong university markets, and older, well-located stock suitable for comprehensive repositioning. Of these, the latter potentially offers greater value appreciation. As the gap between student expectations and available accommodation widens, repositioning existing PBSA assets presents a strategic opportunity for investors seeking resilience and returns. Dated properties in well-established locations that are thoughtfully modernised can provide investors with scale, while creating environments that attract today’s discerning student population. For those willing to reimagine these spaces, the rewards are substantial.
Written by Merelina Sykes and Neil Armstrong, Joint Heads of Student Property at Knight Frank
