Britain’s largest provider of student accommodation is facing challenges in filling its university halls of residence due to a trend of more young individuals choosing to stay at home to save money. Unite Group has experienced a decline in international student enrollment and fewer domestic students willing to accumulate substantial debts.
The company reported that 86% of its student accommodation beds have been reserved for the upcoming academic year, although this was achieved after implementing price reductions. Despite a reservation rate slightly higher than the previous year’s 85%, it falls significantly below the 94% mark from the academic year 2024/25.
The impact of the Covid-19 pandemic has been substantial, as Unite’s halls of residence, which used to be consistently over 97% occupied, are now facing lower occupancy rates. The company’s share price has dropped by more than half since 2022, with an additional 2% decrease following the latest update.
To counter these challenges, Unite Group has decided to sell off halls in less popular universities to concentrate on prominent educational institutions. They aim to divest properties worth between £300 million and £400 million this year.
CEO Joe Lister remains optimistic about the future, indicating progress in reservations for the 2026/27 academic year. He attributes this success to robust marketing strategies, sales performance, and strategic pricing adjustments in certain markets.
Unite Group currently manages 208 properties in 29 cities, totaling 72,000 beds. Their subsidiary, Unite Students, mainly caters to first-year students, with notable bed capacities in London, Manchester, Liverpool, and Bristol. Additionally, Hello Students, another arm of the company, focuses on students beyond their first year.
Despite the current hurdles, Unite anticipates a 94% to 96% occupancy rate for the upcoming academic year, with a projected rental income growth of 1% to 2%. This outlook is slightly lower than the initial expectation of a 3% rental increase.
Furthermore, the company had to revise down the estimated value of its properties, noting a 2.2% decrease in the Unite UK Student Accommodation Fund to just under £3 billion.
According to Max Harper, a senior analyst at Third Bridge, the broader market is likely to face ongoing challenges, with factors such as increased rates of students living at home and diminishing demand for lower-tier universities affecting the overall landscape of higher education.