Should PBSA developers worry about declining Chinese demand?

According to the latest analysis by StuRents, the UK’s leading student accommodation platform, by 2027 the UK will need more than 500,000 beds to close the supply-demand gap. This creates lucrative opportunities for investors. However, recent declines in the number of Chinese students post-A-Level results could challenge developers’ plans, particularly in cities where the market is already oversupplied. 

Demand for UK student accommodation appears strong, with a 3% year-on-year increase in total acceptances and a growing population of 18-year-olds projected to 2030. The number of planning applications and proposed new student beds remain below pre-pandemic levels, creating a supply-demand imbalance. This squeeze creates opportunities for PBSA investors and developers.

There has been a recorded surge in UK student numbers, partially due to an increase in the number of 18-year-olds. However, the proportion of applicants has declined from 44.1% in 2022 to 41.9% in 2024. This raises challenges for PBSA providers which are reliant on international demand.

International demand is threatened by several factors, such as UK universities’ declining global rankings, a recent 15% decline in international student visas, and the 5.8% drop in acceptances from China. This year, Chinese acceptances are 16.9% lower than the peak recorded in 2021.

The PBSA market is heavily reliant on South Asian students as a rent of over £200 per person per week is required to make developments viable. Such high rents are typically more affordable for affluent international students with higher budgets. 

According to StuRents’ data on search behaviour for the 2024-25 cycle so far, the average property being viewed by UK students outside of London was priced at £154.47pppw, compared with an average of £203.62pppw for students from China. 

If Chinese demand continues to dip, it will affect PBSA occupancy in locations that may already be struggling with low occupancy rates. 

Read the full story, packed with independent StuRents’ data, on Green Street News.