Unite (UTG) is ideally placed to capitalise on the growing demand for modern, purpose-built student accommodation, as the number of students in the UK continues to outstrip available accommodation by a country mile. For the 2015-16 academic year 532,000 applicants were awarded places at UK universities, which was the highest annual intake ever recorded and up 92,000 from the previous year. On top of this, the total number of applicants grew to 718,000, which means that applicant numbers outstripped available places by 180,000.
- Demand outstripping supply of student accommodation
- Strong rental growth
- Impending Reit status and higher dividends
- Solid pipeline of developments
- Construction and maintenance costs could rise
- More competition could push asset purchase prices higher
Unite currently manages 46,000 beds, up 3,000 from a year earlier, and there is a longer-term secured pipeline of 6,800 bed spaces. And beds are in short supply, and are expected to remain so for some time to come, so Unite has had little trouble in pushing through rental increases. Like-for-like growth was 3.8 per cent in 2015, up from 3.3 per cent the previous year. Similar rental growth is expected in the coming year. Strong demand has also brought with it considerable earnings visibility. Occupancy for the current academic year stands at 99 per cent, with 67 per cent already secured for the following year. Student numbers have also been swollen by removal of the cap on overseas student numbers, and these now account for more than a third of all accommodated students.