Yield compression in the booming student accommodation market helped lift Unite Group’s net asset value by 20% in the first half of 2015.
The company’s NAV per share now stands at 521p after a glut of trophy deals in the student sector helped drive down yields by as much as 75bps in London and to an average of 5.8% across the portfolio. Unite’s portfolio is now valued at £1.8bn.
Chief executive Mark Allan predicted yields would compress further over the second half of the year because of increasing competition for assets from new entrants. He said the company was well placed in the market, with a strong development pipeline.
“At the moment we are seeing new parties coming in and buying completed property, we are not seeing new parties coming in and building new property,” he said.
“The supply and demand balance is going to remain supportive of the business from what we can see today.”
Unite also achieved strong rental growth in the first half and is on track to deliver 4% growth by the end of the year.
