PBSA Beyond the Capital: The Case for Smaller University Cities

Óscar Raynaud· Head of Living, UrbanPay9 Oct 20264 min

Most student housing capital has gone to the obvious places: capital cities and the largest university hubs. That is where demand is deepest and where investors feel safest. It is also where competition for sites is fiercest and yields are lowest. A growing number of investors and operators are looking one step further out, to smaller university cities with large student populations and very few purpose-built beds.

In my role I hear this conversation more and more. Here is how I think about it.

Why smaller cities are getting attention

The case starts with provision. In Spain, Savills points to opportunities in smaller university cities, where PBSA provision remains limited and institutional competition is lower, even as Madrid, Barcelona and Valencia remain the main investment markets. Earlier Savills analysis found that half of Spain's beds sit in just four provinces: Madrid, Barcelona, Seville and Granada. That leaves many university cities thinly served.

Capital is following. In January 2026, Ardian and Rockfield's pan-European strategy made its first French investment with a 327-bed scheme in Bordeaux, alongside deals in Milan and Barcelona. CBRE notes that stock growth tends to be higher in markets with low provision rates.

How demand differs outside the capital

The resident mix in a regional university city is often different:

More domestic students, who are more price-sensitive and may go home at weekends or in summer.
Fewer but growing international students, often concentrated in specific programmes or exchange schemes.
One or two dominant universities, which makes the relationship with them more important.
A thinner private rental market, which can be a strength, but also means less data on achievable rents.

The result is usually a lower rent per bed and a stronger need for the product to match local budgets. A capital-city scheme copied into a regional city rarely works unchanged.

The risks to price in

Smaller markets carry specific risks. Demand can depend on a single institution's enrolment strategy. Liquidity at exit is lower, because fewer buyers know the market. Summer occupancy is harder to fill. Operating teams are smaller, so a single absence can disrupt service. A nomination agreement with the main university is often what turns these risks into an investable profile. I cover that in universities and operators.

Run a lean operation from the centre

The operators who make regional schemes work run them with a small local team and a central back office. Bookings, verification, contracts, collection and reporting all happen centrally and digitally. The local team focuses on residents, maintenance and the university relationship. That model lets an operator open its fourth or fifth regional city without building a full office in each. I described the same logic for coliving in where remote-worker demand moves next.

Where UrbanPay fits

UrbanPay is how a central team runs onboarding and collection across many smaller sites. Students and guarantors are verified remotely with KYC, contracts are signed with eIDAS-compliant e-signatures, and deposits and rent are collected by account-to-account payment, reconciled to each bed and each legal entity. All of it sits under one account, however many cities you add. See the PBSA solution page.

FAQ

Is student housing in smaller cities a good investment?

It can be, where provision is low, a strong university drives demand and the product matches local budgets. The trade-offs are lower liquidity and more concentrated demand risk.

How is demand different in regional university cities?

Usually more domestic students, fewer but growing international students, lower rents and a greater dependence on one or two universities.

How do operators run PBSA efficiently in smaller cities?

With a small local team for residents and maintenance, and a central, digital back office for bookings, verification, contracts, collection and reporting.

Talk to Óscar

If you run a student housing, coliving or flex living operation and want to see how collection, verification and contract signing fit together on your volumes, book 20 minutes with me or write directly.

Book 20 minutes with Óscar · [email protected] · Contact UrbanPay