Unite Group, the United Kingdom's largest student accommodation provider, is restructuring its portfolio to concentrate on the country’s major university towns amid shifting student demand. The company announced plans to sell between 15,000 and 20,000 beds, mainly this year, reducing its total capacity from 72,000 beds to a range of 55,000 to 60,000. This move reflects a strategic pivot toward around 20 cities where student demand remains strong and growing.
As part of this realignment, Unite has exited Aberdeen and sold properties in Leicester, Leeds, and Nottingham. The group is now focusing on key university hubs including London, Manchester, Bristol, Edinburgh, and Newcastle. The decision follows a decline in the number of overseas students and increased preference among domestic undergraduates to remain living at home, factors that have impacted occupancy rates and rental growth.
The company released its financial results for the six months ending June 30, revealing a slowdown in like-for-like income growth from 7.4% to 1.5%. Adjusted earnings fell by 2% to £142 million, aligning with analyst expectations. Occupancy has decreased from 99.8% in the 2023-24 academic year to 95.2% currently, with forecasts projecting a further dip to between 94% and 96% in the forthcoming term. Rental growth is expected to remain modest, projected at 1% to 2%, down from 4% last year. Average weekly rents at Unite’s properties currently stand at approximately £150, ranging broadly from £84 in Sheffield to over £600 for premium central London studios.
Joe Lister, chief executive of Unite Group, described the company’s strategy as a response to a “less certain” market environment. He emphasized a move to align closely with the UK’s highest-ranking universities, which typically have more selective admissions and are therefore seen as more resilient amid stricter visa regulations that have curtailed overseas student numbers. Lister highlighted the company’s intention to create a “higher-quality business” with sustainable long-term growth prospects through this focused approach.
Shares of Unite Group have declined by nearly one-third over the past year, closing down 1.4% at 549½ pence following the announcement. Analyst John Cahill of Stifel noted that while the reduced portfolio size should eventually stabilize the business, earnings are expected to decline during the divestment period and remain relatively flat for the next two to three years. He indicated that the share price is unlikely to improve until the company can clearly demonstrate a path toward sustainable earnings growth.