Unite: demand for UK student housing outstripping supply

Demand for student accommodation in the UK continues to outstrip supply, specialist provider Unite Group said yesterday, as it reported a record high reservation rate, with 98% of rooms already booked for the 2023/24 academic year. Last year at this time 91% of rooms had been let.

“The supply of purpose-built student accommodation cannot keep pace with growing student demand, at the same time as houses in multiple occupation landlords are leaving the sector”, said Richard Smith, CEO, Unite Group.

Unite said they expect their properties to be fully booked by the time the academic year begins in September. Rental value growth will be around 7% for the year, above expectations and well above the 3.5% growth recorded in the 2022/23 academic year.

“Reservations at record levels reflect strong demand from both students and universities and the attractiveness of our fixed-price all-inclusive offer”, said Smith. “This supports an improvement in our rental growth guidance to around 7% for the academic year”.

Demand from University partners has increased. Nominations agreements, which involve Universities relying on Unite to meet their accommodation needs, now cover 56% of total beds for the 2023/24 academic year, an increase of 4% on the previous year.  

Unite, which is a FTSE 100 company and the UK’s leading owner, manager and developer of student accommodation, provides a room for 70,000 students across 162 properties in 23 University towns and cities in the UK.

The value of its main portfolio has increased by 1.2% to £2.9 billion, according to an independent valuation, thanks to the increase in rental income and a five basis point expansion in property yields.

“Our strong leasing performance will continue to support our property valuations as the market adjusts to an environment of higher interest rates”, said Smith.

Unite said the group remains committed to its pipeline of four projects already underway, that will have a total development cost of £339 million plus £179 million for the student accommodation fit-out, that will be funded through the company’s cash reserves.