Unite Group Q3 Trading Update: Robust Performance Continues with Strong Bookings

The Unite Group, the UK's leading owner, manager, and developer of student accommodation, released their Q3 trading update this week. The update covers both the Unite UK Student Accommodation Fund ('USAF') and the London Student Accommodation Joint Venture ('LSAV') for the quarter ending 30 September 2023.

Continued Strong Booking Figures

The trading update highlights that an impressive 99.7% of their beds have been booked for the upcoming 2023-24 academic year. This compares to 97.8% in 2022-23. The strong occupancy levels are a reflection of Unite's enduring popularity among students and universities.

CEO, Richard Smith, commented: "We have delivered record occupancy and strong rental growth for the 2023/24 academic year, with increasing demand from both students and universities reflecting the growing attractiveness of our fixed-priced, all-inclusive offer. The strong letting performance increases our confidence in delivering at least 5% rental growth for the 2024/25 sales cycle and supports our property valuations as the market adjusts to an environment of higher interest rates.

"The UK is increasingly short of suitable student accommodation as HMO landlords continue to leave the market at pace. As the leading provider of PBSA, we have a crucial role to play and are uniquely positioned to address this supply need. We continue to work closely with universities to ensure students have access to high quality, affordable accommodation."

Consistency in Revenue Growth

Unite Group's report also reveals consistent growth in rental income of 7.3%. The updated cites strong demand in markets as PBSA supply has been unable to meet demand.

The update states: "Rental growth from nominations agreements has exceeded direct-let tenancies as university partners increasingly recognise the value our accommodation provides and are willing to agree increased rental levels on single year deals and new multi-year agreements."

The Unite pipeline stands at 5,600 beds. Of particular interest is the addition this quarter of a 800 bed development in Central Quay, Glasgow, which is still awaiting planning approval. The group's latest Nottingham asset was completed in August and is fully booked for 2023-24. Further properties in Nottingham, Bristol and Edinburgh are currently under construction.

Future outlook

The update indicates a robust outlook, with expectations of sustained student demand growth and a persistent shortage of Purpose-Built Student Accommodation (PBSA) amid a declining House in Multiple Occupation (HMO) sector. As a result, the company anticipates a minimum of 5% rental growth in the upcoming 2024-25 cycle.

Unite Group's Q3 trading update presents several key performance metrics, including high booking rates and a strong development pipeline. These metrics offer valuable insights into the company's operations. However, it is essential to approach this data objectively and consider broader market conditions when evaluating investment opportunities within the student accommodation sector.