Unite Students expects to deliver rental growth of 5% for the next academic year, despite its funds falling in value.
In a trading update this morning, the student accomodation provider said it expected returns this year to be at the upper end of expectations, with a total accounting return of 8%.
It said it was targeting rental growth of at least 5% for 2023/24, up from earlier targets of 4.5%-5%. Around 70% of beds for the next academic year have already been sold, up from 60% sold for 2022/23 at the same time last year.
However, the value of its portfolio has taken a hit. Like-for-like valuation decreases of 1.4% for its £2.88bn UK Student Accommodation Fund and 2.8% for its £1.92bn London Student Accommodation Joint Venture fund dented annual increases of 4.6% and 5.6% respectively.
Chief executive Richard Smith said: “We have seen a strong start to the 2023/24 sales cycle and reservations are significantly ahead of recent sales cycles. We now expect to deliver rental growth of at least 5% for the 2023/24 academic year, which will help offset the cost pressures we are facing through higher utility and staff costs. Growing income also offers support to our property valuations as the market adjusts to an environment of higher funding costs.”
Unite has a development pipeline of around £200m with two developments – Derby Road in Nottingham, completing in 2023, and Jubilee House in Stratford.
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