Is Co-Living An Opportunity For PBSA Investors?

Co-living has previously been seen as a niche property investment opportunity, but as housing shortages and affordability challenges are escalating across major cities in the UK, co-living is emerging as a more strategic investment opportunity for PBSA investors.

What is PBSA?

PBSA, or Purpose Built Student Accommodation, refers to developments that have been designed and managed specifically for student life. It does differ from the traditional Halls of Residence that universities often provide, with the focus on catering to the social needs of students, as well as being based in prime locations for ease of travel.

PBSA has been considered a strong, reliable investment option due to the consistent student population demand, which is still increasing. However, as the co-living sector expands, the interest in PBSA is starting to shift.

Further Demand Changes Market Perspectives

Last year, the investment in the UK's co-living sector hit £ 240 million, bringing the 5-year total investment to £ 1.1 billion. With major cities across the UK, including London, Manchester, Birmingham, and Bristol, seeing growing traction in the co-living sector, there are now approximately 9,000 completed co-living units with a further 5,000 under construction.

Co-living is an attractive prospect to a huge range of renters, from 20 to 40 years old, who are looking for convenient, high-quality homes that offer a range of amenities that promote social interactions, compared to the traditional PRS space. As the first-time buyer age increases, more and more renters are looking for long-term spaces where they can flourish.

Is Co-Living a Natural Expansion of PBSA?

Various cities and towns across the UK with high graduate retention rates are the obvious choice for co-living opportunities. These locations often attract a high number of international postgraduate students and professionals, who are focused on the ease and quality of life that co-living offers.

We're seeing more and more residents start in a PBSA development, and over time transition into a co-living space that suits their needs more and offers them more than just a space to live - but a space to develop and grow.

The Wider Resident Base of Co-Living

One of the biggest attractions of co-living for the modern renter is the widened pool of interest. PBSA is obviously only designed for students, but with most students only studying for 3 years, when their studies have ended, their cycle with renting in a PBSA building also ends. Co-living offers a much wider span in age, with residents having the potential to stay for over a decade. The flexibility, social structure, and convenience that co-living offers its residents mean that they don't want to face the inconvenience of leaving, and in a building that is catered for those ages ranging from 20 to 40, the target market for co-living really couldn't get wider.

The Investment Outlook

Co-living comes with a premium pricing model for residents, as well as high occupancy levels and included bundled services, including housekeeping, maintenance, and social events, which hugely enhance the value. They also help to retain long-term tenants, reducing turnover costs and void periods.

This sector presents a compelling option for PBSA investors to extend their reach and benefit from a growing and resilient rental market aligned with urban living trends and evolving tenant preferences.

If you'd like to learn more about the co-living sector, reach out to our expert team today.