Empiric Student Property says it has been hit by a surprise shortfall in tenants, mainly Chinese students, leaving hundreds of its beds unfilled.
The statement comes just weeks after the company reassured investors that bookings were on track.
In early September, Empiric said it expected to hit 97% occupancy across its 7,685 beds for the 2024-25 academic year.
However, the final figure came in at only 89%, with Empiric claiming the sharp drop was down to a 'slowdown in the pace of reservations' in the final run-up to term.
Postgraduate and international students
The company focuses on postgraduate and international student accommodation, said the drop in numbers reflected a wider student housing trend.
Its chief executive, Duncan Garrood, said: "The booking cycle for academic year 2025/26 has seen an increase in reservations from UK students and a reduction in the number of Chinese students staying with us, potentially the result of geopolitical events.
"Rental growth remains in line with guidance and we are well positioned for January sales activity."
Occupancy has fallen from the 95% rate seen last year, with rent growth of 4.5%, helped mainly by a steady demand from domestic students.
The rental growth remains well below the 9.3% Empiric achieved in 2024 and the 7% increase seen in 2023.
Empiric says the slowdown follows several strong years of record occupancy after the pandemic and the booking cycle has 'continued to normalise'.
Unite's occupancy issues
Empiric's difficulties echo those of its soon-to-be parent company Unite Group, which recently reported its occupancy target issues.
It had 95% of its 68,000 beds filled, which is two percentage points below forecasts.
Unite's portfolio caters mainly to first-year students and the Competition and Markets Authority is reviewing its proposed acquisition of Empiric.
Merger talks began in June and will see Unite becoming the UK's largest student landlord.
After noticing Empiric's occupancy levels were 'tracking a little behind', Unite trimmed its bid offer by £71 million.
Empiric continues to invest
UK students now make up 43% of Empiric's tenants, compared with 30% from China and 27% from other international markets.
Despite the weaker figures, the group continues to invest and improve its portfolio.
Refurbishments have been completed in Bath, Sheffield and Southampton, with another due in Bristol early next year.
Empiric also says it is progressing its refurbishment and decarbonisation strategy, with around 300 beds being scheduled for upgrading before September next year.
All of its newly refurbished student properties are returned to use free from onsite carbon production.
Also, smart heating systems, which have been installed in 55% of its portfolio, are helping to reduce energy consumption costs per bed.
Student landlords should focus on quality
Simon Thompson, the managing director of Accommodation for Students, said the latest data will prompt some landlords to rethink their approach.
He said: "Landlords who have historically relied on overseas tenants, especially from China, may need to adapt their marketing and pricing strategies.
"Domestic demand is still robust, but students are now apparently taking longer to commit, shopping around for better value and flexibility."
He added: "The student accommodation market is normalising after several years of exceptional demand, so landlords need to focus on quality, service and realistic pricing to attract students, even international ones."
