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The PBSA Tribe discussion at ALT/RESI UK (April 2026) explores a shifting landscape for the PBSA sector, characterised by a recalibration of the market where traditional investment models are being challenged by economic pressures, technological advancements, and evolving student needs. While the UK market is considered more mature, it currently faces significant headwinds regarding development costs and regulatory hurdles, leading many investors to look toward continental Europe for better supply-demand dynamics and more favourable entry points.
Host: Nenad Manasijevic - tp bennett
Co-Hosts
- Paul Bashir – Harrison Street
- Ryan Jakes – HB Reavis
- Alicia Edgar – Invesco
- James Hunt – GSA
- Rebekah Tobias – Propela Ventures
The sector is experiencing a significant flight to quality, creating a sharp divide, or bifurcation between top-tier and lower-tier institutions. Russell Group and prime locations like London remain highly resilient because they attract brighter students who believe the student premium (the increase in future earning potential from a degree) still justifies the cost. Conversely, less prestigious tariff 2 and 3 locations are becoming much more sensitive to market shifts. In these areas, occupancy is no longer guaranteed. Some markets that were 100% full for years are now seeing occupancy drop to 70–80% as students opt to stay at home and commute to save costs.
The Affordability Ceiling
The industry has reached a tipping point where rental growth has fundamentally outpaced wage inflation, leading to a lack of wage inflation crises rather than just a cost-of-living crisis. The market is currently dominated by premium products, the "Audi and BMW" of housing, but there is a growing consensus that this model has hit a ceiling. Because the high costs of land and construction make value new-builds nearly impossible, the opportunity now lies in re-imagining first-generation assets. This involves performing cosmetically refurbishments on older, non-ensuite buildings to keep rents sensible, effectively undercutting the premium market while still providing professional management.
Convergence and Flex Living
The boundaries between PBSA, Build-to-Rent (BTR), and co-living are rapidly blurring into a single flexible living category. This trend is driven by a need for a steppingstone from the family home to independent living, catering not just to students but also to young professionals and apprentices. There is an increasing shift of students toward residential BTR schemes because they offer greater lease flexibility, such as two-month notice periods, compared to the rigid 51-week contracts typical of PBSA. Investors are now exploring assets that can be zoned for a mix of occupants, though this creates challenges for traditional underwriting and planning models.
Technological Integration and AI
Technology is transforming both the hardware and software of the sector. On the academic side, there is debate over whether AI will reduce the graduate premium by eliminating certain jobs, potentially making in-person degrees less relevant. Operationally, however, AI is a major differentiator. It is being used for matchmaking students into clusters based on interests and culture to build stronger communities and combat loneliness. Additionally, operators are moving toward AI-native management models that use chatbots for parent and student queries, data-driven dynamic pricing, and automated systems to reduce staff costs and overhead.
Regional Divergence (UK vs. Europe)
There is a stark contrast between the mature UK market and the immature European market. The UK is currently a difficult environment for new development due to high labour costs, a punitive tax environment, and Brexit-related supply chain issues that have made materials significantly more expensive than on the continent. In contrast, continental European secondary markets (cities with 50,000+ students) are highly attractive because they often have a massive undersupply of professional beds. Investors see a pure supply-demand play in Europe, where land is cheaper and the growth potential for professionalised accommodation is much higher than in the more saturated UK cities.
Biggest Opportunity: Repositioning and European Expansion
The most compelling opportunity lies in repurposing first-generation student housing and entering undersupplied European markets. Rather than expensive new builds, investors see value in acquiring older, well-located assets and performing refurbishments to provide a value PBSA product that undercuts the high-end market while remaining more professional than private house shares (HMOs). Simultaneously, targeting secondary European cities with 50,000+ students and little to no professional accommodation offers a supply-demand play with lower land and construction costs.
Biggest Challenge: Viability and Delivery Costs
The most significant hurdle identified is the difficulty of making new-build developments stack financially, particularly in the UK. High land values, soaring construction and material costs, and a punitive regulatory and tax environment have made development inherently risky. Furthermore, there is a mismatch between planning requirements, which often demand extensive, costly amenities, and the students' actual need for affordable, basic housing.
ALT/RESI UK took place on 28 April 2026 at Fulham Pier, London. Find out more about the event at space-plus.org/alt-resi-uk
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