Leeds has just opened a 45-storey student accommodation tower. Arena Point, on Merrion Way beside the First Direct Arena, has 633 bedrooms and stands around 135 metres tall. Its developer describes it as the tallest building in the world used solely for purpose-built student accommodation.
The height isn’t the interesting part. Look at what is inside it: a gym, yoga studio, recording studio, photography studio, private dining room, games room, study spaces and bookable booths, a large roof terrace, free laundry, bike hire, housekeeping, breakfast, counselling and wellbeing services.
This is student accommodation. If your memory of university housing is a damp six-bed terrace in Headingley with mismatched sofas and somebody’s bike chained to the bannister, things have moved on quite a bit.
Purpose-built student accommodation is now a proper product. It isn’t just a room near university. It is a managed, serviced, amenity-heavy living experience.
There are two things I find interesting about that. Do students actually want all of this? And if a building is an amazing product to live in, does that automatically make it a good thing to own?
Not necessarily.
The student accommodation arms race
There is an obvious reason developers keep adding amenities. If you are trying to fill hundreds of very similar bedrooms, it gets harder to stand out. Another developer can build an en-suite room, install the same desk and provide the same internet, so the competition moves outside the bedroom.
One building gets a gym. The next gets a cinema. Then a games room, co-working space, private dining, yoga, a podcast room. You stop selling a bed and start selling a lifestyle.
That works particularly well in an international market, and Leeds has already moved a long way in that direction. Research commissioned by Leeds City Council and the two universities found that, among students from those institutions living in Leeds in 2022/23, 44% were in purpose-built accommodation.
Private PBSA in Leeds also tends to be the higher-spec end of the market. Unipol describes it as offering more amenities and a better specification, usually at a higher rent.
So Arena Point isn’t always competing directly with a landlord renting out a terrace in Hyde Park. Often it is aimed at a different customer, and what it is really selling is convenience.
You arrive in a new city, possibly a new country, and almost everything has been sorted for you: furniture, bills, Wi-Fi, laundry, security, maintenance, somewhere to work and somewhere to exercise. I completely understand the appeal.
But there is a difference between something that genuinely makes your life easier and something that looks good in the brochure. Students seem to understand that too.
Students will give up the cinema
Knight Frank and UCAS published their latest student accommodation survey in October, based on 1,502 incoming students. The results are pretty clear.
Asked what they would give up in exchange for cheaper rent, 78% would lose the podcast room, 69% the cinema room, 66% the gaming room and 60% the swimming pool.
Only 5% would give up an on-site laundrette and only 5% would give up fast Wi-Fi. Just 8% would give up being close to campus, while 16% would lose 24-hour security.
That tells you quite a lot. Students don’t necessarily want an endless list of amenities. They want the things that make their lives easier, and they are happy to lose a lot of the flashy stuff if it means paying less.
The same survey found 85% said value for money was important or very important, while 83% said having bills included mattered.
So the market isn’t necessarily saying give us more stuff. It is saying make living here easier.
Those are not the same thing.
Good Wi-Fi is useful. Laundry is useful. Security is useful. Being able to walk to university is useful. Having somebody actually answer when something breaks is useful.
Whether you really need another cinema room in the middle of Leeds is a different question.
The city is already the amenity
This is the bit I find slightly strange about some city-centre developments. One of the reasons you pay to live in a city centre is because the city already has the amenities.
Gyms. Cinemas. Coffee shops. Restaurants. Bars. Libraries. Co-working spaces. Music studios. Shops. Parks. Transport. That is part of the point of living there.
Yet some developments now seem to be rebuilding parts of the city inside the building. You pay a premium to live in the middle of everything, then pay again to recreate some of it downstairs.
That doesn’t mean all amenities are pointless. A genuinely good residents’ gym can be great. Communal workspace can be useful if you work from home. Parcel rooms make complete sense in a big apartment block.
But I think every amenity should have to answer a simple question: does this actually make living here better, or is it mainly there because it helps sell the building?
They are not always the same thing.
We are also starting to see the same type of product in the graduate rental market. Build to Rent uses a lot of the same ingredients: managed buildings, gyms, lounges, co-working spaces, events, concierge and roof terraces.
Elizabeth Tower in Manchester goes much further. It has a swimming pool, gym and wellness facilities on the 44th floor, alongside private dining and rooftop gardens.
You could look at that and say that students who get used to living like this at 19 will expect the same thing at 29. Maybe. But I don’t think you can prove that.
The person choosing expensive student accommodation at 20 may already be the sort of person who wants a premium apartment at 27. And the 21-year-old who loves a games room may care far more about having another 150 square feet inside their own flat ten years later.
Either way, from an investment point of view, I don’t think you want to rely on getting that prediction right. You want to own something that still works if tastes change.
Leeds itself is changing
There is another change happening at the same time which is easier to measure. The traditional map of student Leeds is pretty obvious: Headingley, Hyde Park, Woodhouse, Burley. Shared houses.
That hasn’t disappeared, and I don’t think it will. There is a whole social side to living with five mates in a Hyde Park terrace that a 45-storey tower cannot recreate. For plenty of second- and third-year students, that will still be exactly what they want.
But students are also moving closer to the centre.
Between 2011/12 and 2022/23, the proportion of Leeds students living within a 15-minute walk of their university rose from 63% to 69%. The proportion living more than 30 minutes away fell from 21% to 12%.
Unipol’s comparison is particularly striking. In Far Headingley and Beckett Park, students accounted for 53.1% of the local population in 2012. By 2023, that figure was 13.4%. Over the same period, the student share of the city-centre population rose from 51.5% to 57.1%.
That doesn’t mean Headingley is finished. It isn’t.
But it does mean you need more of an investment case than Leeds has loads of students. It does.
The better question is: which students want this property?
Demand for what?
There are tens of thousands of students in Leeds. That doesn’t tell you whether a particular property is a good investment, because “student demand” can mean completely different things.
Demand for a £300-a-week studio is not demand for a room in a six-bed house. Demand from an international postgraduate arriving in Britain for the first time is not the same as five second-years wanting to live near their friends. Demand for a professionally managed student building is not the same as demand for an individually owned student pod.
And lots of students wanting somewhere to live does not mean lots of buyers will want your particular property when you eventually come to sell it.
I have written before about why aggregate demand doesn’t move much on its own if buyers cannot actually finance the stock. The same principle applies here.
It isn’t enough for demand to exist. It has to be demand for the thing you own, from somebody who can actually buy it.
And even the big PBSA operators can’t just assume demand will always be there. Unipol’s latest Leeds landlord briefing describes a more competitive PBSA market, with operators working harder to keep returning students and some concern around weaker international demand.
So however good the amenities are, the customer still needs to think the price is worth paying.
The safest student investment might not need students
This is where it gets more interesting from an investment point of view. If I were buying a property that happened to appeal strongly to students, ideally I would want it to work without them too.
That isn’t always possible. HMOs have different planning, licensing and management issues, and some locations are naturally dominated by students. But generally, I want options.
I would rather own a fundamentally good property in a fundamentally good location that happens to have excellent student demand today than something whose entire case is a student will always rent this.
So I would want to know:
- Could young professionals want it?
- Could another normal landlord finance and buy it from me?
- Could an owner-occupier ever want it?
- Is the location good without the university?
- Is the property mortgageable on ordinary terms?
- If student demand weakens, who is next?
That is very different from buying something highly specialised because a brochure tells you how many students attend the local university.
A city can have a brilliant student market and still contain terrible student investments. There is no contradiction there.
And plenty of bad student property gets sold using the first point while nobody spends enough time looking at the second.
Amenities aren’t fundamentals
Arena Point is an impressive building. I imagine plenty of students will love living there.
But I don’t think the lesson for an investor is to go and find another building with a recording studio. If anything, it is the opposite.
The more sophisticated these buildings become, the more important it is to separate the product from the asset.
Amenities can make somewhere better to live. They can make it easier to rent, justify a higher rent and genuinely improve the experience.
But they don’t replace the basics: location, affordability, management, running costs, mortgageability, flexibility and exit.
A cinema room might help somebody decide where they want to live next year. It probably isn’t the reason somebody buys the property from you in ten years.
The city is already the amenity. Anything you add inside the building after that should have to earn its place.
So ignore the brochure for a minute. Take away the gym, the roof terrace, the recording studio and the concierge, and look at the actual property underneath it all.
Would you still want to own it?