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Unite earnings grow 13% to reach £184.3m

UK purpose-built student accommodation provider Unite Students hit a record £184.3 million in earnings in 2023, its latest results show.

Unite says its earnings growth is expected to accelerate from 2026 as development completions increase. Photo: iStock

Unite says it has been "deliberate in aligning" its portfolio to high and medium tariff universities

The 13% year-on-year rise in earnings in the year ending December 31, 2023, saw the operator reach a 99.8% occupancy rate and 7.4% rental growth.

The report also shows a “strong outlook” for reservations in the 2024/25 year, with 80% of beds already booked.

Chief executive Joe Lister said that the “strong set of results” was driven by full occupancy, rental growth and substantial investment.

“The supply-demand imbalance of student accommodation is acute and continues to intensify,” he said in a statement.

“We play a leading role in tackling this shortage, easing pressure on the wider housing market and freeing up homes for families.”

An 8% reduction in the number of HMOs in England since 2021, according to the Department for Levelling Up, is equivalent to between 100,000-150,000 fewer beds available for students to rent.

Unite also noted that “private landlords are choosing to leave the sector in response to rising mortgage costs and increasing regulation” and new supply of PBSA is down 60% on pre-pandemic levels.

The slowdown in supply is due to planning backlogs and viability challenges created by higher costs of construction and funding, its report says.

Additionally, obsolescence of older university accommodation is also expected to increase, it added.

The supply squeeze is expected to continue for a number of years.

Lister added that the provider is “taking an innovative approach to delivering more homes for students”.

“University partnerships provide a compelling opportunity to deliver new, high-quality accommodation and our first joint venture with Newcastle University is only possible for a business of our reputation, scale and development expertise,” he said.

The £250m joint venture with Newcastle, announced this month, will see Unite act as development and asset manager with 51% ownership share.

Together the partners will develop 2,000 beds at a site in the city for delivery in 2027 and 2028.

Unite added that changes in visa rules meaning family members can no longer accompany postgraduate taught students to the UK will have limited impact for its operations.

Its report noted that the change will particularly impact postgraduate student numbers from India and Nigeria who are “more likely to bring dependents, with a disproportionate impact on lower-ranked universities”.

“Postgraduates from India and Nigeria accounted for less than 3% of our bookings for 2023/24”

Unite says it has been “deliberate in aligning” its portfolio to high and medium tariff universities, with 93% aligned to Russell Group markets.

“Postgraduates from India and Nigeria accounted for less than 3% of our bookings for 2023/24. Moreover, our product offering is focused on single occupancy rooms, meaning we expect limited direct impact from the change,” it said.

Applications data for the 2024/25 academic year is “encouraging”, with total applications flat on 2023/24 but still 6% ahead of pre-pandemic levels.

UCAS data suggests that international student applications are up 1% for the next year, with “2% growth from non-EU markets more than offsetting a 3% reduction in EU applicants”.

“Demand for the Group’s accommodation remains strong,” the report added.

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