Rising construction costs alongside constrained new supply continue to support investor confidence within the UK’s purpose-built student accommodation (PBSA) sector, despite facing a more challenging development environment. Recent research conducted by JLL indicates that investment across the EMEA multi-housing and PBSA sectors achieved a remarkable €17.4 billion during Q2 2026, marking the highest quarterly transactional volume since 2022. The total investment for the first half of the year reached €31.2 billion, reflecting a 10% increase compared to the same period last year and 16% above the five-year average for the first half.
Investment Drivers
While the growth in overall investment was primarily driven by substantial multifamily portfolio transactions, JLL emphasised that the living sectors, including PBSA, continue to benefit from robust occupational fundamentals. The persistent supply constraints across key European markets have further solidified this trend.
Construction Costs and Development Challenges
During the second quarter, construction costs rose by 3.7%, surpassing inflation, as global supply chain disruptions linked to the Middle East conflict continued to affect material costs and shipping. Although there was a 7.7% increase in residential building permits during Q1 2026, the report suggests that escalating development costs will likely continue to limit the delivery of new homes and PBSA in the near future.
Affordability and Demand
JLL’s analysis highlighted affordability as a significant driver of demand across the living sectors. Average residential sales price growth decelerated to 3.1% during the quarter, whereas rental growth outpaced it at 3.4%. This shift indicates that renting has become more affordable than purchasing in two-thirds of the key European cities examined.
Future Outlook for PBSA
The report concludes that strong tenant demand, coupled with a persistent imbalance between supply and demand, is likely to continue fostering investor sentiment across the living sectors, including purpose-built student accommodation. As new developments remain constrained, this trend is expected to create further opportunities for investors in the UK PBSA market.