'This Wasn't In People's Business Plan': Student Sector Leasing Slows After Boom Years

Was 8 October the UK student accommodation sector’s Wile E. Coyote moment? After a couple of years of defying negative headwinds, the industry may have finally looked down. 

Unite Group’s results weren't terrible — its occupancy for the 2025-2026 academic year is 95%, down from 97% last year, and the listed company reiterated its earnings-per-share guidance in a trading statement last Wednesday. But its shares dropped 12% over the course of the day, and the company is a potential bellwether. 

After three years of rapid rental growth, the heat may be going out of the student housing market. 

“This wasn’t in people’s business plan,” GSA Head of Global Real Estate James Hunt told the audience at Bisnow’s Student Accommodation Summit, which was held the day after Unite updated markets.

GSA is one of the world’s largest student accommodation owners, with $7B of assets under management in 80 cities across the globe. 

Owners can’t just sit back and expect to achieve 98% occupancy and thus see rents grow by 5% to 6% a year, Hunt said. That has been the norm for the past few years, even as university budgets have become ever more stretched and government immigration policies have threatened to curtail overseas student numbers. 

There is no single reason to point to, Hunt said. The number of people going to university remains above long-term averages, he said, as does the number of overseas students, who are typically the occupants of higher-end schemes. 

But he did point to affordability as an issue. Recent rent rises have made even the average purpose-built room expensive for students. For the first time in more than a decade, London is seeing a slight dip in occupational resiliency, he said, and the recent preconception that any scheme located near a Russell Group university will perform well no longer necessarily holds true.

“I think affordability has been an agenda item for the last two or three years, and perhaps there's a little bit of moderation needs to be considered more generally,” JLL Head of UK Student Housing - Living Capital Markets Huw Forrest said. “I think we're seeing investors looking very much at underwrite, as opposed to yield pricing, in the sector.”

Invesco Real Estate is an institutional investor with one asset in the UK, and when comparing the country to continental Europe, the market can look slightly less attractive, said Alicia Edgar, Invesco Real Estate director of living investments in Europe. 

The UK has a more attractive higher education sector for international students and the advantage conferred by the English language. But at the same time, when it comes to purpose-built student accommodation, there is more supply. 

“I think it's going to be a turbulent outlook, for sure,” she said. “But I think it will remain liquid. There will be trades happening, maybe a little bit of rebasing for some of those portfolios that have got to close out over the coming months. Looking forward, I think there'll be winners and losers across the board.”

While development in the sector has not slowed as dramatically as in the build-to-rent market, the delay to projects created by new Building Safety Act regulations has made investors warier of backing new projects, she said.

The flip side of that is that a slowdown in construction would reduce supply, putting a floor under rents, Fusion Group Chief Investment Officer Daniel Harris said.