Purpose-Built Student Accommodation (PBSA) has become an increasingly significant segment of the UK housing market, specifically designed to meet the needs of the expanding student population.
Compared to traditional housing, Purpose-Built Student Accommodation (PBSA) is designed to offer contemporary amenities, foster a feeling of community, and provide the convenience that students need during their academic years.
As universities continue to grow and attract students from both within the country and from abroad, there is an increasing need for high-quality housing that is specifically tailored to meet students’ requirements.
This has resulted in a notable increase in PBSA developments throughout the UK, which now plays a crucial role in the housing strategies of numerous cities and towns.
The economic impact of PBSA on its local area
While PBSA primarily focuses on providing students with suitable housing, its impact extends beyond just the student population.
The presence of PBSA in a community can lead to substantial economic growth and development, from creating employment opportunities to enhancing the local tax base.
It can also have positive effects on local economies, contributing to job creation, boosting local businesses, and driving urban regeneration, among other benefits.
In this article, we will explore eight key ways in which PBSA positively impacts local economies, showing that these developments bring benefits that extend beyond providing housing for students.
Job Creation and Employment Opportunities
Construction Phase
During the construction phase, Purpose-Built Student Accommodation (PBSA) developments have a significant and immediate impact on local economies by creating jobs.
As building a new Purpose Built Student Accommodation (PBSA) project requires a diverse range of skilled and unskilled labour, including architects, engineers, construction workers, electricians, and plumbers. This can boost employment in the local area, creating sustained work for its residents.
Moreover, the construction of PBSA projects creates a ripple effect, benefiting local suppliers of building materials, equipment rental companies, and other related businesses.
This surge in construction activity can inject significant capital into the local economy, supporting jobs directly linked to the construction site and the broader supply chain.
Operational Phase
Once the PBSA is constructed and operating, it generates job opportunities.
With the day-to-day management of a student accommodation facility requiring various staff such as property managers, maintenance workers, cleaners, and security personnel, PBSA provides long-term employment opportunities for local residents, contributing to the community’s overall economic stability.
This can also have a knock-on effect, attracting new residents to the area and creating opportunities for different skilled jobs, thus boosting the local population.
Boost to Local Businesses
Increased Consumer Spending
One clear way PBSA developments positively impact local economies is by providing a boost to local businesses.
When students move into purpose-built student accommodation (PBSA), they bring with them a significant increase in consumer spending. This influx of spending can substantially impact local shops, restaurants, cafes, and service providers.
In many local economies, small businesses play a vital role. Having a thriving student community can be crucial for their success and sustainability. This heightened demand can result in increased revenues, enabling businesses to grow, hire more staff, and further benefit the local community.
Support for Startups and Small Businesses
The establishment of Purpose-Built Student Accommodation (PBSA) can also create opportunities for new businesses to emerge. Startups and small businesses that cater specifically to student needs, such as cafes, bookstores, stationery shops, and convenience stores, often thrive in areas with high concentrations of student accommodation.
Entrepreneurs may view PBSA developments as a sign of a stable and expanding customer base, which could motivate them to start new businesses in the area.
Additionally, PBSA developments often feature retail spaces on the ground floor, offering excellent locations for both new and existing businesses. These spaces are very appealing to retailers aiming to cater to the student market, and their presence can further enrich the liveliness and economic well-being of the local community.
PBSA’s presence not only supports existing businesses but also stimulates innovation and entrepreneurship. This can lead to the creation of new businesses that cater to the evolving needs and preferences of the student population.
The entrepreneurial activity enriches the local economy and contributes to the community’s overall economic resilience and diversity.
Increased Demand for Public Services and Infrastructure
Transportation and Infrastructure
The increase in students residing in Purpose-Built Student Accommodation (PBSA) developments often results in a higher demand for public services and infrastructure improvements, which can have a positive impact on the local economy.
Since students heavily rely on public transportation for commuting to and from university and for their daily activities, there may be a significant increase in the use of local transport networks.
This increased demand can justify investments in public transportation, such as the expansion of bus routes, more frequent services, or the creation of new transport hubs.
The growing student population and overall increase in population can often speed up infrastructure projects that benefit the entire community. This can make areas more accessible for everyone, leading to more foot traffic in commercial areas, higher property values, and increased economic activity.
Healthcare and Public Services
The growing student population in an area increases the demand for healthcare and other public services.
This higher demand leads to the expansion and improvement of local healthcare facilities, including GP surgeries, dental practices, and mental health services. The expansions are driven by the need to serve the student community, but ultimately benefit the entire population by improving access to healthcare and reducing waiting times.
The same can also be said for public services in other areas, such as waste management, policing, and emergency services. Local authorities typically allocate additional resources to these services to accommodate the growing population, providing better service for all residents.
Improvement of the Rental Market
Diversification of Housing Options
The development of Purpose-Built Student Accommodation (PBSA) is essential for diversifying the local rental market.
In the past, students have typically rented private housing, which often led to competition with local residents for limited rental properties.
The introduction of PBSA into the market offers an alternative housing option specifically designed to meet the needs of students, which could help alleviate pressure on the broader rental market.
As more students choose to live in PBSA, the availability of traditional rental properties increases, making it easier for non-student renters, such as young professionals, families, and key workers, to find suitable accommodation.
This diversification of housing options helps to balance supply and demand, potentially leading to more stable rental prices across the market.
Stabilisation of Rents
The development of Purpose-Built Student Accommodation (PBSA) has the potential to stabilise or even reduce rent levels in areas with high student populations. In cities and towns where there is significant competition for housing, students can drive up rents, making it more challenging for local residents to afford accommodation.
By providing purpose-built housing for students, PBSA developments help to segment the rental market, reducing direct competition between students and other renters. This separation can stabilise rents in the private rental sector, as landlords no longer need to cater primarily to the student market.
In some cases, the increased availability of rental properties due to the development of PBSA can lead to decreased rents, making housing more affordable for local residents. This is especially important in university towns and cities where housing affordability has become a significant issue. Furthermore, PBSA developments often set a high standard for student accommodation, pushing private landlords to improve the quality of their rental properties to remain competitive.
This can lead to overall improvements in the quality of housing available in the local market, which would benefit all renters.
Attraction of Investment
Domestic and International Investment
The development of Purpose-Built Student Accommodation (PBSA) often attracts both domestic and international investment, which can significantly impact local economies.
Investors are increasingly interested in PBSA due to the consistent demand for student housing, the reliable rental income it generates, and the relatively low vacancy rates compared to other real estate types. This makes PBSA a highly attractive asset class for institutional investors, private equity firms, and real estate investment trusts (REITs).
The influx of capital from private sector investors can stimulate local economic growth in several ways. Firstly, large-scale PBSA projects often involve substantial financial outlays, which can increase economic activity during both the construction and operational phases.
This investment funds the development and supports a wide range of local businesses and service providers, from construction firms to maintenance companies.
Furthermore, the presence of well-funded PBSA developments can attract additional investment to the area. For instance, other real estate developments, such as retail spaces, commercial offices, and leisure facilities, may follow PBSA projects, drawn by the increased footfall and economic activity in the area.
This can lead to the creation of vibrant, mixed-use developments that contribute to the broader economic regeneration of the locality.
Long-Term Economic Growth
The economic impact of Purpose-Built Student Accommodation (PBSA) developments extends beyond the initial investment phase. As these accommodations become integral parts of the local community, they contribute to sustained economic growth.
The presence of modern, well-managed student accommodation enhances a city or town’s attractiveness as a destination for both domestic and international students.
This, in turn, can boost the reputation of local universities, leading to higher enrollment rates and greater economic contributions from the student population.
Moreover, the consistent demand for PBSA ensures ongoing investment in maintenance, upgrades, and possibly expansions, further embedding these developments into the local economic fabric.
Over time, this sustained investment can lead to increased property values in surrounding areas, more robust local economies, and greater financial stability for the community.
Urban Regeneration and Revitalisation
Redevelopment of Underutilised Areas
Purpose-Built Student Accommodation (PBSA) investment notably aids local economies through urban regeneration and revitalising underused or neglected areas.
Many PBSA developments are strategically placed in zones experiencing economic downturns or in need of redevelopment. These projects transform these spaces into lively student communities, infusing new life into previously underutilised or rundown areas.
Such redevelopment can trigger a cascade effect, spurring additional investment and enhancements in the surrounding areas. As students occupy these new accommodations, the increased pedestrian traffic can draw new businesses, like cafes, shops, and entertainment venues, to the area.
This surge in commercial activity can help rejuvenate the neighbourhood’s economy, making it a more desirable place to live and work.
Increased Property Values
Introducing Purpose-Built Student Accommodation (PBSA) into an area can significantly increase local property values. These developments enhance the area’s attractiveness and functionality, leading to higher demand for surrounding residential and commercial properties. This increased demand often leads to higher property values, benefiting local homeowners and landlords.
Higher property values can also generate additional revenue for local governments through increased property taxes, which can be reinvested into further community improvements. This cycle of investment and reinvestment helps sustain the area’s long-term economic health.
Additionally, the presence of PBSA can attract a more diverse demographic to the area, including young professionals and families drawn to the amenities and vibrancy that typically accompany student accommodation. This demographic shift can further drive demand for housing, retail, and services, creating a more dynamic and economically resilient community.
Contribution to the Local Tax Base
Business Rates and Property Taxes
One of the often-overlooked benefits of the PBSA sector, is their significant contribution to the local tax base.
PBSA projects typically involve substantial property investments, translating into higher property taxes and business rates for local governments. These taxes then provide a steady stream of revenue that can be reinvested into community services, infrastructure, and public amenities.
This increased tax revenue can help offset the costs of supporting a growing student population, such as enhanced public transportation, waste management, and other public services.
Funding for Public Services
The enhanced tax revenue generated by PBSA developments directly impacts the funding available for public services.
Local councils can use this additional income to improve essential services such as education, healthcare, and public safety, benefiting the student population and the wider community.
For example, the increased demand for healthcare services brought on by a growing student population may necessitate expanding local clinics or hiring additional healthcare professionals.
The additional tax revenue from PBSA developments can be crucial in funding these expansions, ensuring that students and local residents have access to high-quality healthcare.
This additional revenue supports the funding of public services and infrastructure improvements, leading to a higher quality of life for all residents and promoting long-term economic sustainability in the community.
Social and Cultural Integration
Fostering a Vibrant Community
The development of Purpose-Built Student Accommodation (PBSA) often acts as a catalyst for creating lively and dynamic communities that enhance the local social and cultural environment.
The presence of students living in PBSA brings a youthful energy and a diverse range of activities to the area. Students frequently participate in local events, cultural activities, and social initiatives, which contribute to the vitality and dynamism of the community.
Moreover, the availability of modern amenities and communal spaces within PBSA developments encourages students to socialise and interact with the broader community, thereby enhancing social cohesion.
Bridging Cultural Gaps
PBSA developments significantly promote cultural integration, particularly in cities and towns that host large numbers of international students.
Students from diverse cultural backgrounds bring a wealth of experiences, traditions, and perspectives, contributing to the multiculturalism of the local community.
This cultural diversity enriches the area’s social fabric, offering opportunities for cross-cultural exchanges and mutual understanding.
These interactions help to bridge cultural gaps, reduce prejudices, and foster a more inclusive and tolerant society.
By fostering a vibrant, inclusive environment and bridging cultural gaps, these projects help create a richer, more connected society that benefits students and long-term residents alike.
PBSA Benefits To The Local Economy – Conclusion
Purpose-Built Student Accommodation (PBSA) developments offer numerous benefits beyond simply providing students housing.
The broader advantages of PBSA developments are evident: they offer essential student housing and serve as catalysts for economic growth, social integration, and urban revitalisation.
These developments foster vibrant and inclusive communities where students and long-term residents thrive. By bolstering local economies and strengthening social bonds, PBSA projects play a vital role in developing and sustaining cities and towns across the UK.
The benefits of PBSA are also clear for local authorities, developers, and investors. Supporting or investing in these projects allows developers to contribute to their community’s economic improvement and social cohesion, ensuring long-term benefits for all stakeholders.
Thinking of investing in the PBSA sector? Speak to our expert main contractors and lean on our expertise.
As a company with extensive experience in PBSA development, we are well-equipped to help you handle your project needs.
Our expertise in delivering high-quality student accommodation and our commitment to community integration make us a valuable partner in any development within the PBSA sector.
