8th Apr 2022 08:44
(Alliance News) - Unite Group PLC on Friday backed guidance as it anticipated strong student demand for the academic year ahead, but cautioned over build cost inflation.
The Bristol-based student accommodation provider said it has seen strong progress in sales in the first quarter ended March 31. Unite continued that trading "materially closed the gap" to record pre-pandemic reservation levels.
Across the accommodation provider's entire property portfolio, 77% of rooms are now sold for the 2022-23 academic year, up from 69% in the 2021-22 academic year.
An independent valuation of the Unite UK Student Accommodation Fund placed it at GBP2.87 billion, up 4.0% from GBP2.76 billion in the same quarter a year ago.
Unite said that it expects strong demand from both domestic and international students for 2022-23, with UCAS applications up 7% compared to pre-pandemic levels and reduced disruption from travel restrictions and grade inflation.
Unite noted that this is supportive of its guidance for occupancy of 97% for the 2022-23 academic year and rental growth of 3.0% to 3.5%.
The accommodation provider added that it continues to see inflationary pressure on build costs for its development pipeline. It generally accounts for 50% to 70% of its total development costs, it said.
Unite explained that this reflects ongoing supply chain disruption created by the pandemic, as well as rising energy and materials prices, which have been exacerbated by the conflict in Ukraine.
"In the current environment, headwinds from build cost inflation are impacting our medium-term development pipeline, but we will seek to mitigate these effects where possible," said Chief Financial Officer Joe Lister.
Shares were up 1.3% at 1,136.00 pence each on Friday morning in London.
By Abby Amoakuh; [email protected]
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