Alison Mackay considers the outlook for Scotland’s Purpose Built Student Accommodation (PBSA) sector, which continues to attract strong investor interest despite political and regulatory uncertainty.
Strong demand and investment momentum
Purpose Built Student Accommodation (PBSA) is now an established asset class. According to new data from Knight Frank, PBSA investment activity in the first half of 2025 totalled £1.6 billion - more than 45% higher than the long-term average of £1.1 billion.
Knight Frank’s data suggests that the second half of the year could be even more buoyant, with an estimated £2 billion worth of PBSA schemes and portfolios currently on the market or under offer. If those deals progress as expected, 2025 could prove to be a standout year for PBSA investment volumes.
Despite this positive impetus, demand for PBSA continues to outstrip supply in many Scottish university towns and cities, particularly Edinburgh, Glasgow, and St Andrews. This imbalance has resulted in rising rental values and high occupancy levels, further strengthening PBSA’s resilience as an asset class.
Investor appetite and market drivers
The growing popularity of PBSA as a stable, long-term investment is attracting a wide range of investors, including overseas institutions, pension funds and private equity firms. It has increasingly become the development of choice in Scotland for many investors and developers, keen to meet substantial demand during a period when more traditional property sectors, such as retail and offices, have faced challenges.
Strong investor appetite is being driven by several key factors, including a return to in-person university attendance, continued growth in student numbers, and the relative resilience of the sector compared to other real estate asset classes.
Policy uncertainty: a potential challenge
PBSA has been in the press recently and is the subject of an ongoing Scottish government review including the possibility of the development of a new model student residential tenancy for the sector.
The potential fly in the ointment is ongoing uncertainty in relation to rent control measures contained in the Housing (Scotland) Bill (“the Bill”). These measures aim to improve living conditions and protect tenants' rights.
During Stage 2 of the Bill there was an amendment to the definition of “relevant tenancies” to include student accommodation. The effect of this amendment is the inclusion of student residential tenancies and PBSAs in rent control provisions. This was very unwelcome news for the PBSA sector.
The Scottish Property Federation has been very vocal in its disappointment about the inclusion of student accommodation in the definition of “relevant tenancies”. It is cautiously optimistic that rent controls will not affect PBSA, but this is still an unknown and will depend on what happens during Stage 3, which is the final stage of the Bill’s passage through the Scottish Parliament.
Stage 3 is expected to take place in October this year at the latest. Following vocal opposition to the amendment of the Bill to include PBSA within rent controls, there have been governmental and cross-party assurances that the amendment is not widely supported. While the final form of the Bill remains to be seen, this has created an expectation that PBSA will be removed from the scope of rent controls.
If this happens, it will deliver a significant boost to investor confidence in Scotland’s PBSA sector.
Outlook for 2025
With market activity accelerating and a strong pipeline for the remainder of the year, 2025 is set to be one of the most active years yet for UK PBSA investment.
In the Housing Emergency Action Plan announced on 2nd September, the Cabinet Secretary for Housing, Mairi McAllan stated:
“In principle, we intend to exempt, where appropriate, Mid-Market Rent and Build to Rent properties, to protect and promote investment in those sectors.”
Although PBSA is not specifically referred to, it is hoped that it will be included within the rent control exemptions.
The final shape of the Housing (Scotland) Bill will be critical, with rent controls remaining the key uncertainty for investors. Even so, strong demand and limited supply mean the fundamentals of Scotland’s PBSA sector remain highly resilient.
Published 04 September 2025
