A student accommodation specialist is warning about the potential pitfalls of investing in individual student rooms or small pods as opposed to more conventional full-property buy to let-style investment.
The Mistoria Group claims there are risks associated with this niche investment.
“A major disadvantage of student pods is their resale value and capital growth potential. The value of property will fluctuate with the market and the pool of potential investors is much smaller than for other types of student accommodation, such as HMOs and flats” claims Misteria’s managing director Mish Liyanage.
“With a normal buy to let, you can sell the property at any time on the open market, through a reputable agent and expect a reasonable capital appreciation. However, selling a student pod will encounter problems. For example, who decides the market value? As a piece of real estate per square metre it is very expensive - double the average market value - and there is no established resale market” Liyanage warns.
Mistoria is also warning about the guaranteed returns that can be offered with such investments.
“Investors need to weigh up whether that think providers of student pods are robust enough to stand behind the guarantee. They also need to be aware that the seven per cent guarantee may not stand in five years’ time, when their investment could have devalued as new developments have been released” insists Liyanage.
The blocks containing the pods are, Misteria says, high spec with en-suites and flat screen TVs and are indistinguishable from residential flats, except for the branding that promises a ‘boutique’ or ‘luxury’ student experience.