Unite Group has upped its rental growth forecast for the forthcoming academic year to 7% (from 6%) due to high demand for its student accommodation, and said that the higher education policy remains stable under a Labour government.
The company revealed that 94% of rooms were now reserved for the 2024/25 academic year, ahead of its typical leasing pace and slightly below the record reservation rates last year (2023/24: 98%). Demand from universities is strong with 1,000 additional beds secured via nomination agreements compared to the same stage of the sales cycle last year.
Demand from international students also remains robust with 18% of the portfolio sold on direct let tenancies to international students for 2024/25 (2023/24: 19%). It added that it had not seen a meaningful impact from the removal of visas for family members of international postgraduate taught students, reflecting the single-occupancy nature of its properties.
The strong demand has given the company confidence in delivering rental growth of at least 7% (previously 6%) and occupancy of 98-99% for the 2024/25 academic year.
Valuation update
At 30 June 2024, the company’s USAF’s property portfolio (which comprises 25,602 beds in 66 properties across 19 university towns and cities in the UK) was valued at £2,931m, a 3.2% increase on a like-for-like basis during the quarter. The valuation increase reflects quarterly rental growth of 3.3%. Property yields were unchanged over the quarter at 5.2%.
Its LSAV’s property portfolio (which comprises 9,708 beds across 14 properties in London and Aston Student Village in Birmingham) was valued at £1,995m, a 2.8% increase on a like-for-like basis during the quarter. The valuation increase was driven by quarterly rental growth of 2.9%. Property yields were unchanged over the quarter at 4.5%.
Higher education policy update
On the new government, the company said: “The Labour Party manifesto recognised the soft power and economic value of UK Higher Education and stated an ambition to improve access to university for a growing 18-year-old population. Encouragingly, there is also recognition that university funding arrangements are not meeting the needs of students and universities and the new Government has committed to creating a secure future for UK Higher Education.
“In May, the Migration Advisory Committee’s review of the Graduate Route for international students recommended no change to visa policy, which was accepted by the previous Government prior to calling the election.”
Joe Lister, Unite Students chief executive, commented:
“Student demand remains strong from both domestic and international students, reflecting the continued appeal of UK Higher Education, our fixed-priced, all-inclusive offer and the growing shortage of high-quality student homes. Together with our alignment to the UK’s strongest universities, this supports stronger rental growth for the 2024/25 academic year and underpins growth in our property valuations.
“We have also made further progress with the delivery of our record development pipeline, with significant planning milestones in Glasgow and Newcastle. These projects will deliver much needed new student homes in some of the UK’s strongest university cities.“