The UK’s largest purpose-built student accommodation (PBSA) provider is embarking on a major strategic overhaul, with plans to dispose of up to 20,000 student beds while warning that rising construction costs are threatening the delivery of new developments across the sector.
Unite Group has confirmed it intends to streamline its portfolio, reducing its holdings from around 72,000 beds to approximately 55,000 beds across 20 key university cities. The move follows its acquisition of Empiric and reflects a growing focus on the UK’s highest-performing universities, where student demand continues to strengthen despite wider challenges facing the higher education sector.
The company has already completed around £190 million of property disposals this year and now expects total sales to reach approximately £400 million, with proceeds supporting its wider investment strategy and share buyback programme.
The portfolio reshaping comes at a time when many universities are facing financial pressures and softer student demand, particularly outside the country’s leading institutions. In contrast, applications to so-called high-tariff universities continue to grow, prompting Unite to concentrate future investment around locations with stronger long-term occupancy prospects.
Alongside its portfolio review, Unite has issued a stark warning over the future pipeline of student accommodation developments, highlighting that soaring construction costs, more stringent building regulations and weaker investment values have made many new schemes financially unviable.
According to the company, developments outside London now require weekly rents of more than £300 to achieve acceptable returns, compared with Unite’s current average regional rent of around £190 per week.
The same economic pressures are also affecting the Build-to-Rent sector, where viability challenges are slowing the delivery of new residential developments across many parts of the UK.
Despite these headwinds, Unite expects demand for high-quality student accommodation to remain resilient. A combination of fewer new developments, older PBSA schemes leaving the market and continued reductions in private rented housing available to students is expected to tighten supply over the coming years.
Construction activity continues on two major off-campus developments. Hawthorne House in Stratford, providing 719 student beds, has now reached practical completion and is awaiting Building Safety Regulator approval before opening for the 2026/27 academic year. Meanwhile, the 934-bed Central Quay development in Glasgow remains on schedule for completion in 2027.
The company is also reviewing plans for a further 2,400 consented beds across London and Bristol, with options including revised funding arrangements, joint venture partners or potential disposal depending on market conditions.
Future growth is expected to be increasingly focused on partnerships with universities themselves. Unite has already committed to delivering more than 4,300 additional student beds through on-campus joint ventures, including the Castle Leazes redevelopment in Newcastle and Cambridge Hall in Manchester.
For the construction and property sectors, Unite’s latest strategy reflects the changing dynamics of the PBSA market. While demand for student accommodation remains robust in key university locations, escalating construction costs, tighter regulatory requirements and shifting investment returns are reshaping development priorities, with greater emphasis on long-term partnerships, asset optimisation and selective investment in high-demand markets.
The company also confirmed it expects to invest a further £61 million in fire safety remediation works over the next two years as part of its ongoing building improvement programme. Unite anticipates recovering between 50% and 75% of total cladding remediation costs through claims against contractors, although reimbursements are expected to follow after the remediation works have been completed.
As the sector adapts to changing economic conditions, Unite’s strategy signals a significant shift towards portfolio quality over scale, reinforcing the importance of targeting resilient university markets while navigating one of the most challenging development environments the PBSA sector has experienced in recent years.
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