Unite student housing suffers slump in property value as rents fall

Student housing provider Unite, the UK's largest, is facing a slump in property values as higher interest rates and weaker rental income affect its FTSE 250 operations. The company's UK Student Accommodation Fund saw a four percent drop in value to £2.8 billion in the third quarter, while its London-focused joint venture declined by 3.4 percent to £1.9 billion.

These declines are due to investors demanding higher yields and reduced rental income at some properties. Earlier in July, Unite reported a £417 million pre-tax loss, marking a decline from a £186 million profit in the same period the previous year. Despite selling 95.6 percent of its beds for the 2026 to 2027 academic year, slightly above last year's 95.3 percent, targeted rent cuts to attract tenants resulted in a mere 0.6 percent increase in like-for-like rental income, with average annual rents falling 0.3 percent.

Unite has been adjusting prices to boost occupancy, with a 15 percent income lift in Nottingham achieved through this strategy. CEO Joe Lister stated that Unite has met quarterly expectations despite fluctuations in student demand and university behavior. The company plans to reduce its portfolio from 70,500 beds to between 55,000 and 60,000, focusing on universities with strong demand.

Unite has already completed £200 million in property sales this year, offering another £225 million in assets, and aims to shrink its total portfolio by 15 percent. The company also reported a positive trend at Hello Student, the business acquired through its takeover of Empiric, where occupancy increased to 92 percent from 87 percent the previous year. Unite maintains its full-year adjusted earnings guidance of 41.5p to 43p per share.