Bristol student accommodation specialist Unite revealed yesterday its profits had been badly hit by the slump in the property market.

The Bristol-based company released its interim results revealing that its profits had fallen £12.8 million in the first six months of the year.

The announcement saw its share price drop by four per cent but the company which won the Bristol Evening Post Business of Year award insisted it was on course to weather the storm.

As a result of the collapse of the property market, the company has been repositioning itself in the market-place, concentrating on cites with large student populations rather than smaller towns.

Unite, which posted a profit of £25.8m a year ago, maintained a dividend of 0.83p per share.

"The lacklustre state of the economy is very significant, and will continue to depress values well into 2009," Mark Allan, the chief executive of the company, said.

The company has said as part of its new strategy it plans to buy up land and property at the current depressed values and has raised about £241m – or 14 per cent of its portfolio – selling property in places such as Preston, Stoke and Luton

The company also insists the growing student population and increasing demand for its rooms makes it a safe investment for the future.

Reservations for the forthcoming academic year stand at 95 per cent of available property and in excess of the total 92 per cent achieved for the 2007/08 academic.

Mr Allan added: "The current difficulties in the UK economy are likely to persist well into 2009 and, as a result, our priority will continue to be on managing the group's roll-out plan prudently, conserving cash and borrowing capacity appropriately and maintaining our focus on London and other high quality student locations in terms of development activity.

"There are clear signs of increased activity in the development market place and clear evidence that land prices have fallen.

"We expect these values to fall further and believe that the dislocation between falling development site values and robust student accommodation investment values will present increasingly attractive opportunities for the group later in 2008 and throughout 2009."

Despite the drop in the share value analysts were still bullish about the company's prospects yesterday.

"Unite has an unassailable market leading position in one of the few secular growth markets within the real estate sector, where rental growth remains strong and the industry demand/supply balance favourable," Landsbanki analyst Mark Reed said in a note.

"Key investor concerns of the sustainability of its room roll-out and the strength of on-going university accommodation demand look overdone."

Following its last spate of disposals, Unite's debt will fall to around £500m. It will also have about £800m in cash and loan facilities by the end of 2008 to buy cheap land.