UK PBSA: Positive Demand Outlook

Following strong student demand, exceptional rental growth and investor enthusiasm for the sector in the couple years post-Covid, concerns around policy, sustainability of demand and occupancy have dampened the excitement around UK PBSA. Unite Group’s share price – currently trading at a ~22% discount to Green Street NAV with an implied EPRA NIY of 6.8% (see Figure 1) – reflects the public market’s caution on operating fundamentals following a bearish trading update last year in which portfolio occupancy declined. 

However, by taking a step back to look globally at international student flows and by focusing on recent application data, the case can be made that the demand outlook for UK PBSA is more positive than what many suggest. 

Firstly, international students globally are projected to continue to increase by 3.5%-4% per annum, reaching over 9 million students studying abroad by 2030. The UK’s ability to capture those students (i.e. market share) is heavily influenced by its relative attractiveness (policy and sentiment) vs. competing study destinations. Recent geopolitical issues and more stringent policy across the US, Australia and Canada make the UK’s recent bearish policies look mild in comparison. This provides relative demand upside as students who seek top universities in an English-speaking country turn to the UK. 

Secondly, review of recent UCAS (undergraduate) application data can provide us with a view of current student demand that flows into current and upcoming academic years. Total UCAS applicants for UK universities are up ~80k since pre-Covid and continue to show strong momentum into the 2026/27 academic year (see Figure 2). Focusing on the international cohort, US and Chinese applicants are growing nearly double digits over the last 2 years on average, reversing signs of weakness observed from 2022 to 2024 (see Figure 3). Indian applicants have stabilised following exorbitant growth after the implementation of the 2-year work visa, and rest-of-world applicants (e.g. Pakistan, Nigeria) continue to grow at a steady pace. 

However, this recent growth in applications is not spread evenly across the UK. Overall applications for Russell Group (RG) universities are up ~5.5% whereas non-Russell Group (non-RG) applications are down. This bifurcation in demand is especially pronounced among international students, where the gap in YoY growth rates for RG and non-RG is the highest in over 10 years (see Figure 4). Given the preference for quality, the “demand pool” – measured by application-to-acceptance ratio – for RG universities has expanded significantly since Covid relative to non-RG where the ratio has declined (see Figure 5). This deeper demand pool suggests top universities can better manage student intake & are less prone to sudden shocks. 

Within the Russell Group cohort, London’s five RG universities outperformed their peers on overall application growth for the current academic year (see Figure 6). This is especially noticeable among international students (see Figure 7), where London RG universities saw a 13% uptick in applications (vs. 6% for non-London RG) – recent momentum demonstrates a clear shift in preference towards highly-ranked prestigious institutions. 

While other important factors – policy, affordability, supply – continue to shape the sector over the medium-term, international competitiveness and recent data suggests there are reasons to be positive about the demand outlook for student housing in the UK. 

Samuel Charlton

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