Unite Group lowers student rents for first time in 25 years
Unite Group has reduced rents across its student accommodation portfolio by 0.3% for the current academic year, marking the first decline in over 25 years outside of the Covid-19 lockdown period.
The UK’s largest student accommodation provider attributed the rent reduction to declining demand driven by falling international student numbers and an increasing proportion of British students choosing to remain in parental homes during their studies.
Market pressures
The rent adjustment represents a reversal from earlier expectations this year when the group anticipated being able to increase rental rates. University cities including Nottingham, Leicester and Sheffield have experienced particularly weak demand for student accommodation, with domestic students prioritising cost savings by living at home.
Despite the rent reduction, Unite achieved an occupancy rate of 95.6% across its 72,000 places, up marginally from 95.3% in the previous year. Joe Lister, Chief Executive of Unite, stated: “We have delivered reservations in line with our expectations as student demand and university behaviour evolved through this sales cycle.”
Portfolio valuation decline
The company’s property portfolio valuation fell 3.9% between July and September to £4.7 billion, bringing the total decline for the year to approximately 8%. The valuation pressures reflect broader challenges facing the student accommodation sector amid economic pressures raising concerns for the UK property market.
In response to weakening demand, Unite has begun considering the disposal of certain halls of residence within its portfolio. The moves come as the sector adjusts to structural changes in student accommodation preferences and affordability constraints affecting the rental market more broadly, similar to challenges facing landlords across different property segments.
The student accommodation sector faces ongoing uncertainty as universities and accommodation providers navigate changing patterns in international student recruitment and domestic student behaviour in response to rising living costs.
