James Street York c via candid

Singapore-based Q Investment Partners is forward-funding S Harrison's 300-bed PBSA in York. What does this mean for the PBSA market? Credit: via Candid OR

The Subplot

The Subplot | Student housing, Whitehall trouble, happy hotels

Welcome to The Subplot, your regular slice of commentary on the business and property market from across the North of England and North Wales.


  • Supply-side inflation: like so much else, student housing development is getting squeezed
  • Elevator pitch: your weekly rundown of who is going up, and who is heading the other way


Pipeline problems

A Singapore investor backs a York student housing scheme. Yet something funny is going on in the pipeline for purpose-built student accommodation.

It’s only days since Singapore private equity business Q Investment Partners backed S Harrison’s 300-bedroom PBSA scheme in York, as Place Yorkshire reported. It will be ready for the 2025 student intake and operated by the Prestige Student Living brand Homes for Students. The deal came as a 212-bed student tower at Wade Lane in Leeds topped out while developer Integritas launched a new phase of its Bijou student housing scheme in Bradford.

You love PBSA

This reads like the familiar story of the last five or six years: investors loving PBSA because it provides assured long-term income based on solid demographic shifts. If you’re Big Money and you’ve had a belly full of risk, PBSA feels like the sweet spot.

Reasons to be cheerful

So is everything going well? Up to a point, yes. But look a little further into the future and the picture is mixed. Data shared exclusively with Subplot by rental platform StuRents shows a sharp and sustained fall in the volume of planning applications for new student housing development. Planning applications continue to decline, down 33% year-on-year in the first quarter of 2023. The numbers have been falling steadily since 2016 (from annualised 75,000 to about 35,000) although there are strong regional variations. Richard Ward, head of research at StuRents, says: “Due to construction industry constraints and interest rate hikes, delivery of PBSA has slowed in recent years.”

Young people

What makes this puzzling is that the demographics point in the opposite direction – to more, not less, forward-demand for PBSA. “A recent report from UCAS indicates that by 2030 there could be 30% more applicants compared with 2022, with growth driven largely by changes to UK demographics that will result in more 18-year-olds,” says Ward. At the same time as demand goes up, so the supply of alternatives to PBSA falls through the floor. Savills looked at the shared rental housing stock, in particular five-bed properties of the kind students go for, and says there are 31% fewer than the pre-2020 average (thanks to landlords pulling out of rental, mostly).

Less not more

All this ought to mean tonnes more planning applications – but it doesn’t seem to be working like that. Savills says there are just 144,000 beds in the UK pipeline and barely 35,000 of those are under construction. As a result, occupancy levels are at record highs, supporting rental growth of around 7%, according to Unite and Empiric, which is expected to drive continued strong investment returns over the coming years. Durham is increasingly hot, whilst Manchester is super-hot. The market is strong enough in Newcastle and Sheffield for Investec Real Estate to stump up £85m to refinance and refurbish Global Student Accommodation’s PBSA in both cities (and in three other locations).

Demographic bubble

So, time for explanations, which is where it gets tricky. There are two strong possibilities. Number one is those demographics. Says Ward: “Looking further ahead, the 18-year-old population is set to decline significantly post-2030 – something that investors should be looking at when making long-term decisions about PBSA.” Is that it, then? A bubble in the supply of 18-year-old students – here soon, gone soon after – is causing investors to play cautious?

Dollars matter

Or is this all about money, and where it’s coming from? A staggering £7.8bn was invested in PBSA in 2022, an increase of 89% on 2021. The overwhelming bulk of that money came from two places: US (47%) and Singapore (24%). The dollar-sterling exchange rate makes UK real estate cheap(ish), and the exchange rate is more favourable for dollar investors today than in 2022. A long-term view, plus good maths, explains QIP’s investment in York. But, be honest, if you’re a bit twitchy, and the world is your oyster, would you invest in the UK just now? Well, exactly. You’d wait.

Wait a little

Savills said in early May 2023 that it expected overseas money to return to PBSA later this year as rising rents offset increased operational and construction costs. But the mood on inflation, interest rates, and recessionary risk has soured sharply in the last seven weeks. Construction costs don’t appear to be crumbling, although input price growth is slowing according to the latest PMI data. While there’s plenty of capital waiting to invest in the next three years, you’d have to assume most of it will arrive closer to 2026/2027 than 2023/2024.

In the meantime, rents will keep going up. And that – drum roll – is what deep-set, endemic, supply-side inflation means.


Going up, or going down? This week’s movers

A good time to invest in hotels, a bad time to accept cooperation from Whitehall. Doors closing, going up.

Hotel excitement

A rash of hotel proposals suggests the leisure sector is as busy, and as supply-constrained, as yesterday’s inflation figures seem to suggest. The latest crop includes progress on Ask:Patrizia’s 344-bedroom, dual-branded 181,000 sq ft Novotel and Ibis hotel at Baltic Quarter on Gateshead Quayside, and proposals for an aparthotel at Leeds Kirkgate Market and the refurb of George Hotel in Huddersfield.

Revenue per room (RevPAR) is rising in most places, with Hull scooping a place in the Top 5 according to Colliers’ regular review of the sector, which you can download here. Hull was also given star billing as the UK’s most favoured growth centre, easily trumping distant rival Plymouth. York remains the North’s star performer and one of the UK’s most favourable places to build if you match land and development costs against potential revenue.

Whitehall listening

Whitehall’s latest snub to the North’s transport ambitions has a distinct whiff of Yes Minister, the 1980s political TV comedy. The story so far: pending a massive government rethink, Northern Powerhouse Rail is probably dead but it continues to live a ghostly afterlife in the minutes and agendas of Transport for the North, the supra-regional quango chaired by former Tory transport secretary Patrick McLoughlin. TfN is justifiably angry that it has been side-lined and wrote a stiff letter to the Department for Transport explaining how valuable regional input could be. Talks with Whitehall followed and a careful reading of a report to today’s TfN board is sadly hilarious.

TfN wants to “co-sponsor” the NPR project in a more meaningful way. DfT responded with an assurance that it valued TfN’s advice and that the quango was welcome to write with its views whenever it liked, eg it offered precisely nothing. TfN officials then counter-offered: how about we have regular face-to-face chats and you let us share what comes up with local councils, in confidence? A modest ask, but departmental officials sucked their teeth and said (paragraph 3.8) that they will have to ask ministers what they think – which implies they didn’t bother up to this point, and that the whole teensy-weensy-itsy-bitsy concession may be withdrawn anyway (subtext: so don’t push your luck, you regional upstarts). This little episode – warm blah blah, but a fuss over the meanest cooperation – tells you Whitehall is definitely not letting go.

Get in touch with David Thame: [email protected]

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