Purpose build student schemes to surge again

The firm said a decline in Houses in Multiple Occupancy supply over the last few years, driven by stricter renter reforms and higher mortgage costs, had provided fresh impetus to the purpose-built student accommodation sector.

Announcing strong earnings for last year, chief executive Joe Lister today said there were strong growth opportunities for the sector in the years ahead.

He said Unite had now built up a record £1.3bn development pipeline in the strongest University markets.

This includes a £569m committed pipeline in Russell Group cities, and a £250m joint venture agreed with Newcastle University, agreed this month.

Unite is also assembling a £452m future development pipeline and added a new London scheme for delivery in 2028.

He added that Uite was also targeting £50m-75m spend annually on refurbishment projects.

Lister said: “Since 2021, there has been an 8% reduction in the number of HMOs in England, equivalent to 100,000-150,000 fewer beds available for students to rent, equivalent to 100,000-150,000 fewer beds available for students to rent.

“Private landlords are choosing to leave the sector in response to rising mortgage costs and increasing regulation.

“New supply of PBSA is also down 60% on pre-pandemic levels, reflecting planning backlogs and viability challenges created by higher costs of construction and funding.

“Obsolescence of older university accommodation is also expected to increase due to building age and the need to operate buildings more sustainably. In many cities, property valuations are below replacement costs, further constraining new supply.

He added: “The combination of these factors has significantly increased demand for our accommodation in many cities and we expect this supply challenge to continue for a number of years.”

“The outlook for development is strong and we are tracking a number of further opportunities at attractive returns, which we will look to secure over the next 6-12 months.”

From the £452m uncommitted future pipeline, Unite plans an additional 2,373 beds.

This includes the Freestone Island project in Bristol, where planning is expected shortly. It is also hoping for planning in the second quarter for the 800-bed Central Quay development in Glasgow.

And Unite has secured an option to acquire a 501-bed project in Elephant and Castle in London. This scheme is expected to be delivered in 2028, subject to planning.