Morgan Stanley has identified student housing as one of the most durable segments in Europe’s real estate market, naming Unite Group (LSE:UTG) its preferred stock in the sector.
The bank said that demand for student accommodation in the UK is likely to strengthen as tougher immigration rules in the U.S., Canada and Australia drive more international students toward British universities. Unite, the UK’s largest dedicated student housing operator, is expected to capture much of this demand.
UCAS figures show that acceptances for undergraduate courses in 2025/26 have risen 3% year-on-year, with the number of non-EU international students up 5%. Limited new supply alongside these trends is forecast to sustain rental growth above 4% for longer, compared with the 3–4% assumed by consensus. Unite itself has guided for like-for-like rental growth of 4–5% and occupancy above 97%.
Yet despite these fundamentals, Unite’s share price has lagged, ending Aug. 28 at 709p—near decade lows and well below Morgan Stanley’s 1,000p target. The bank attributed the weaker performance to slower booking progress this summer, but noted that this was largely a result of students holding back after some operators introduced late-cycle discounts last year.
Unite’s results underscore the resilience of the business. The company reported a 2024 net asset value per share of 972p, with Morgan Stanley projecting 1,034p for 2025 and 1,226p by 2027. Earnings per share are expected to climb from 46.6p in 2024 to 52.5p by 2027, while dividends are projected to grow from 37.3p to 41.9p in the same period. Debt remains manageable, with net debt to EBITDA forecast at 6.7x in 2025 and an EPRA loan-to-value ratio of 26%.
Another catalyst is Unite’s planned acquisition of Empiric Student Property. If approved, the deal would add roughly 7,700 beds to Unite’s existing 67,729, raising exposure to international students to 32%, postgraduate students to 19%, and high-tariff universities to 69% of its tenant base. Morgan Stanley expects the acquisition to be earnings neutral in its first year and accretive thereafter as cost synergies are realized.
Summarizing its view, the bank said Unite combines size, access to the most resilient demand pools and an attractive valuation. “Student accommodation in Europe offers a great narrative,” the brokerage said, pointing to rising international enrollment and supply constraints. It maintained its “overweight” rating, with an implied upside of 41% from current levels.
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