Unite Group has announced it is preparing to reshape its student housing portfolio by focusing on 'stronger' universities amid a rent growth slowdown.
The student accommodation provider told investors it had seen weaker demand in several regional cities, but markets linked to top institutions continued to outperform.
The firm also says it will accelerate its disposal of weaker sites.
The group wants to increase its exposure to high-tariff universities from 64% to 80% over the medium term, narrowing its footprint to between 18 and 20 cities.
It will prioritise areas where students see clearer value from their studies and where occupancy and rental performance remain resilient.
Unite experiences challenges
Joe Lister, Unite's chief executive, said: "The vast majority of our portfolio is delivering strong levels of occupancy and rental growth, but we have experienced challenges from weaker demand and higher supply in some cities.
"We will increase the alignment of our portfolio towards the strongest universities by accelerating disposals, delivering university partnerships and growing our addressable market through a dedicated offer to returning students."
He added: "The fundamentals of the higher education sector remain strong, underpinned by growing domestic demand and increasing mobility of international students."
Unite has 68,000 beds
The student accommodation provider operates around 68,000 beds mainly used by first-year undergraduates, and has set an occupancy target of 93% to 96% for 2026/27 with rental growth of 2% to 3%.
The firm's update reflects the pressure facing the student housing market, with tighter visa rules for international students and questions over the value of degrees. Several student housing operators have reported slower letting activity, particularly in places heavily reliant on Chinese applicants.
Unite's comments came as the Competition and Markets Authority confirmed it had unconditionally cleared its £723m takeover of Empiric Student Property.
Empiric, which trades under the Hello Student brand and caters more to returning undergraduates and postgraduates, has also pointed to reduced demand linked to a fall in Chinese student numbers.
The addition of Empiric's 7,685 beds across 23 locations, including four properties in Bristol and four in Exeter, will expand Unite's footprint but also increase the need for integration.
Lower income in 2026
Unite also warned that lower occupancy and shorter tenancy lengths in the 2025/26 academic year will mean weaker income.
Development schemes that take longer to reach stabilised income will hit profits, while fees from university partnerships are expected to drop.
Operating costs and overheads are set to be flat next year, helped by savings delivered this year.
Unite is already working with Newcastle University and Manchester Metropolitan University on a joint venture covering 4,300 beds and intends to target one new partnership a year.
Student accommodation sector's future
The managing director of Accommodation for Students, Simon Thompson, said: "Many student accommodation landlords will see that Unite's shift towards top-tier universities tells a wider story about the market.
"Demand is fragmenting, international trends are unpredictable, and weaker cities are becoming harder work."
He added: "Yet the strongest institutions continue to draw students in large numbers, creating a clear divide in performance across the country.
"That means the market is changing far faster than many people realise and for landlords in cities with strong universities, you will, it appears, enjoy strong demand."
