Shares in Unite Group PLC (LSE:UTG) fell 5.9% after the student accommodation developer reported lower rental growth for the 2025/26 academic year and room sales below its long-term target.
Sales this academic year have reached 95.2%, below its 97%-plus occupancy target, despite the latest UCAS data showing a 3% increase in undergraduate students accepting places at university to 512,000.
Like-for-like rental growth was 4%, down from 8.2% the previous year, reflecting a normalisation in market conditions across the purpose-built student accommodation (PBSA) sector.
High-tariff universities, ie those that require higher entry grades and to which Unite is increasingly exposed, have continued to capture a growing share of student demand, the company noted, with acceptances up 8% year-on-year, compared to 2% for medium-tariff and -2% for low-tariff universities.
There has been "particularly strong" growth for UK 18-year-olds and international applicants from China and the US.
However, overall study visa applications remain 11% below 2023 levels, prior to the introduction of restrictions on dependant family members for postgraduate taught students.
Unite said the outlook for international demand "remains encouraging" thanks to growing student mobility and the increasing attractiveness of the UK as a study destination as competitor markets introduce more restrictive policies.
Despite the softer sales performance, Unite reaffirmed its earnings guidance of 47.5-48.25p for the full year, with chief executive Joe Lister saying that despite sales being below target, "we saw a strong clearing period which has contributed to our outperformance of the wider PBSA sector".
"Looking ahead, the outlook remains robust, underpinned by growing demand from school leavers and stabilising international admissions.
"Our income is also underpinned by nomination agreements with long-term university partners, which now cover 59% of our beds... At the same time, our portfolio is increasingly aligned to high-tariff institutions, which continue to attract a growing share of student demand."
Unite said rental growth is continuing to drive modest increases in property valuations, and that the acquisition of Empiric Student Property is expected to complete in the second quarter of FY2026.