Unite Group recently expressed concern regarding the headlines portraying their profits as plunging, particularly following the announcement of their 2025 results. The company emphasised that these headlines were misleading, as the reported drop was largely influenced by a revaluation loss of £73.7 million, contrasting sharply with the substantial £239.6 million gain recorded the previous year. This context helps to clarify the company’s reaction to the media portrayal of its financial performance.
Chief executive Joe Lister acknowledged a decline in demand in a few cities but pointed out that the majority of the firm’s portfolio was performing strongly. He referred to the overall performance for the year as “robust,” supported by a rental growth of 4% and an impressive occupancy rate of 95.2% for the 2025-26 academic year. These figures, however, are tempered by comparisons to last year’s 8.2% rental growth and a much higher occupancy rate of 97.5%. Furthermore, forecasts for 2026-27 suggest income will be at the lower end of guidance, with expected rental growth between 2% and 3% and occupancy dropping to a range of 93% to 96%.
While these developments may not indicate a dramatic downturn for Unite, the company is poised to benefit from its recent acquisition of Empiric Student Property, which will contribute positively to their income. Nonetheless, the situation warrants careful consideration, especially in light of broader trends affecting higher education and the economy.
“Eye-watering costs are turning a growing number of potential students off university altogether.”
The current landscape for student accommodation is complex, with the PBSA sector often cited as a strong indicator of long-term growth potential. This assertion is largely backed by the steady increase in applications to UK universities. In fact, Unite’s results statement highlights a 5% increase in UK 18-year-old applicants for the 2026-27 academic year. UK universities remain attractive to international students, a trend that could be further supported by the reintroduction of the Erasmus+ scheme in 2027, which may help restore interest among EU students following the financial barriers that have arisen post-Brexit.
However, the broader context is more intricate. Data from a recent House of Commons research briefing indicates that the higher education entry rate for UK 18-year-olds increased from 24.7% in 2006 to a peak of 38.2% in 2021, but has since declined to 36.3% in 2025. Additionally, UCAS data reveals that 89,510 UK 18-year-olds who secured a place for the 2025-26 academic year plan to live at home, representing a 7% increase compared to the 2024-25 academic year. This trend suggests a shift in student behaviour, likely influenced by the escalating costs associated with higher education.
Many parents and guardians are becoming increasingly aware that these trends are unlikely to reverse. The financial burden of attending university, compounded by high interest rates on student loans, is deterring a significant number of prospective students from pursuing higher education altogether. Rising youth unemployment, alongside concerns regarding the potential impact of artificial intelligence on future job markets, further complicates these dynamics.
As the number of students opting to commute from home rises, it is often out of necessity rather than preference, highlighting a concerning trend. Furthermore, those who choose to move to university towns are increasingly inclined to seek more affordable accommodation options, which may have implications for the PBSA sector.
The ongoing development boom in the PBSA sector shows no immediate signs of abating. Knight Frank’s recent UK Student Market Update reported a 10% year-on-year growth in annual investment, reaching £4.3 billion last year. However, there are indications that a slowdown may be on the horizon, potentially arriving sooner than many stakeholders had anticipated.