The UK real estate market in 2025 is set to offer a diverse range of opportunities, with student housing in the top five key growth areas.

Alongside build-to-rent (BTR), co-living spaces, hotels, and offices; student housing presents promising avenues for investment despite ongoing economic uncertainties, according to Daniel Austin, chief executive and co-founder of ASK Partners.

However, navigating challenges such as tax increases, inflationary pressures, and tightening environmental regulations will be crucial.

“While 2024 proved challenging, marked by recovery from the 2020 lockdown and shifts in interest rate policy, ASK successfully navigated these hurdles,” Austin said.

“By bolstering our loan book with income-producing assets, the firm has mitigated default risks, completing 20 loans in the year to end of October, and has now £1.7bn without capital loss.

“With a clear understanding of emerging trends and a commitment to innovative strategies, ASK believes that investors in 2025 can position themselves to achieve significant returns in this evolving market.”

According to its research, student living continues to thrive as a standout sector in real estate, offering resilience and strong growth potential in a challenging market and yields stable between 4.5%-5.5%.

University towns like Oxford, Cambridge, and Bristol lead the way, driven by consistent demand, double-digit rental growth post-COVID, and rising numbers of international students seeking high-quality accommodation.

“Investors who understand the cyclical dynamics of these cities, shaped by league table performance and regional factors, are well placed to capitalise,” said Austin.

“New approaches are reshaping the market, with firms creating funds for forward-funded or joint-venture projects to bypass traditional private equity reliance.”

However, developers face headwinds, including rising refinancing costs and stricter lending criteria.

“Collaboration is growing, with calls for a special-purpose lobbying group to unite universities, councils, and developers in overcoming sector barriers,” said Austin.

“Amid strong demand, robust returns, and creative solutions, student living stands out as a compelling investment opportunity for 2025.”