Trading statements by the UK's biggest corporate student accommodation provider an insight in to how the market may develop for smaller landlords.
The business model for the Unite group is set to move focus to London rather than the rest of the country – leaving opportunities for other accommodation providers to fill the gaps.
The key business drivers for student accommodation in London are:
• The full time student population of 266,000 is larger than the next five largest student markets combined
• An incredibly low supply ratio. London‟s Universities can only supply 36% of the bed spaces required to meet their accommodation need, compared to a national average of around 65%
• A large international student population of around 70,000 with high accommodation requirements and expectations
A market analysis shows that the largest student housing provider in the top 10 markets are house in multiple occupation landlords. Unite has less than a 10% market share in any of the top markets despite owning student halls worth £1.25 billion in 17 cities across the UK.
Once Unite's current building pipeline is completed, the group will have 10,000 beds in London against a target of 15,000.
Unite also plans to charge less for rooms - around £150 a week, compared with the £200 current cost for an ensuite and £300 for a studio.
The top 10 student cities, according to Unite, are:
• London
• Manchester
• Glasgow
• Birmingham
• Leeds
• Edinburgh
• Nottingham
• Sheffield
• Liverpool
• Newcastle
Trends worth noting are 46% of Unite's London students are from outside the UK and most new development proposals in the capital are located at key public transport interchanges that can serve several universities and colleges rather than adjoining specific institutions.
Phil White, Unite Group chairman, said: “2010 was a year of excellent progress for Unite. We have made timely and effective improvements to our capital structure and operating platform, which have contributed to a resilient performance in the recent challenging economic times and driven significant improvements in both profitability and net asset value.
“We have a portfolio that is well positioned for continued rental growth, a well funded and attractive development pipeline that will add significantly to earnings in future years, financial capacity to add to this pipeline and carefully considered plans to grow the business further. As a result, we look to the future with a confidence that is clearly illustrated by our intention to reinstate a dividend during 2011.”
