8 April 2025
If you are covering Unite Group's Q1 update, please see the following comment from Oli Creasey, head of property research at Quilter Cheviot:
"Unite Group, the UK’s largest listed student accommodation provider, posted a Q1 update this morning, with mixed signals. The company has reported valuation growth in both its London and UK regional portfolios at just below 1% for the quarter in each, implying an annualised growth rate of 3-4%. This increase has come from rental growth, with modest yield expansion in London capping a slightly higher rental growth figure in the capital. The rental and capital growth figures are slowing compared to last year, but that is to be expected; student accommodation rents are largely inflationary, and the last couple of years have seen supra-normal growth rates in the sector which are now abating.
"What is a little concerning is the current reservation rate, which at 75% is well below the prior year (84%). Unite’s management describe this as in line with expectations for a later leasing cycle this year. Part of this slow-down is rental growth related – with rents rising less quickly, students are less likely to panic and reserve next year’s room early to secure the best possible deal. However, this figure is still low compared to history. Looking back, the last time a lower reservation rate was visible at this point in the academic year was in 2021 (73%), when significant uncertainty around lockdown rules was holding students back from making decisions. Unite still expects the portfolio to be fully occupied by the start of the next academic year, and is guiding to rental growth of 4-5%, which ties in well with the quarterly valuation update.
"Unite’s trading statement is also notable in that it does not contain the word ‘tariff’. As a sector, the direct impact of the ongoing geopolitical situation is very limited for student accommodation. However, time will tell how many other companies - both REITs and across the wider market - will be able to avoid the subject as the Q1 reporting cycle picks up speed."
