As the discussion on the concept of co-living gathers momentum in the Irish market, new research by property advisors CBRE provides insights on the co-living sector in the UK and Continental Europe, an emerging asset class that offers a blended solution of residential and flexible short stay accommodation. According to CBRE, co-living schemes create a living experience as an active community, and address some of the challenges faced by young people in an urban environment.
CBRE’s Europe Co-Living report highlights a selection of key cities that are responding to current demands from transient populations made up of students, single professionals and digital nomads with up-and-built co-living schemes. The report looks at the economic, social and market trends that are giving rise to this new living environment across Europe, with a focus on London, Amsterdam, Berlin, Madrid, Milan and Vienna.
Co-living has garnered significant interest from investors, operators and occupiers in recent years, and shares similarities with multifamily housing and purpose-built student accommodation (PBSA). As with these other residential segments, co-living has private living space supplemented by communal areas, but its operating model differs in that it is centered around the amenity and community offer.
Primarily aimed at single professionals, but with no age limit, co-living aims to create an instant community for those seeking open-minded friendships and provides an opportunity to live in city-centre locations that would usually be too expensive in the traditional private rented sector or to buy. Flexible tenancies and monthly payments inclusive of bills are among the other advantages of the co-living offer.
CBRE reports that changing patterns of work, rising loneliness, and the emergence of the sharing economy are making people re-evaluate the environment they want to live in. Some co-living schemes offer co-working space, and with people increasingly opting to work from home, this will be an attractive facility, along with flexible contract lengths and a less onerous form of letting agreement than the traditional private rented sector.
Jennet Siebrits, UK Head of Research at CBRE, said: “The level of renting across Europe has risen to over 30%. The factors contributing to this growth include rising unaffordability to buy, urbanisation and social changes, all helping to underpin strong demand for rental housing.
“In our research, we found that co-living monthly payments, often with bills and cleaning included, compared favourably against private rents in four out of six of the cities we focused on, making them attractive for young adults wanting to leave home and pursue their career in a city.
“The co-living experience can help tackle some of the challenges faced by young people. Our research found that loneliness is a problem across Europe; co-living seeks to address this by providing a social element and communal spaces, in order to foster friendships and networks. Occupiers tend to be from the generation that grew up immersed in technology, and co-living operators are happy adopters of digitalisation. Co-living also allows occupiers to fulfil their sustainability goals by being a part of a shared economy, thereby reducing their carbon footprint.”
Impact of Covid-19 on co-living
Jo Winchester, Executive Director, PBSA and Co-Living Valuation & Advisory Services at CBRE said: “With its private self-contained accommodation for sole occupants or couples, co-living is a more favourable environment for social distancing than living in shared rented accommodation. Operators adapted quickly to the situation this year, for instance implementing contactless delivery collection points and enhanced cleaning of communal areas.
“Meanwhile, the community element to co-living hasn’t fallen by the wayside, in fact operators are reporting high levels of engagement in social activities on site, when these are permitted under local restrictions. Digitisation is enabling providers to implement government-imposed social distancing measures in communal areas and introduce ‘virtual’ social events.
“Many co-living developments have high speed broadband as standard, and some go further, offering co-working spaces and perhaps a coffee shop to support homeworking. This allows people to work effectively, while still staying connected and in easy reach of their workplaces and the social and cultural hub of the city centre for when restrictions ease.”
Co-living in London
CBRE’s findings indicate that overall the co-living concept was similar in all the cities studied, but with variations in room sizes and typologies and the local regulatory framework. These are explored in the city sections of the report, with a focus on London, Amsterdam, Berlin, Madrid, Milan and Vienna.
The co-living concept in London generally consists of a large managed rental scheme, comprising small private studio units plus large communal spaces. The communal spaces generally consist of a gym, lounge areas, and often a food and beverage offering. The inclusion of co-working space can be a key difference to other types of residential accommodation.
Residents pay an all-inclusive rent, including use of the facilities and all utilities, but have their ‘own front door’. There is usually a lifestyle element to co-living, with on-site management teams working hard to create a sense of community through organised social events.
Flexibility of contracts is another key advantage of co-living, with licence-style agreements rather than assured shorthold tenancy agreements (ASTs). Contract lengths vary between 3–12 months with rates adjusted to different lengths of stay.
Jo Winchester, Executive Director, PBSA and Co-Living Valuation & Advisory Services at CBRE said: “Demand for London’s co-living developments is supported by the high numbers of single professionals and mature students in need of a flexible living option, combined with a shortage of suitable housing.
“Operators and developers are increasingly bringing forward sites through a variety of planning routes, and for the first time the current version of the London Plan has a policy (H16) dedicated to ‘large managed rental blocks’.
“Co-living operators are seeking to offer a genuine alternative to shared houses that are sometimes poorly managed by private landlords. Our research shows that co-living rents in key boroughs compare favourably to rents for private flats when location, the use of on-site facilities and bills are factored in.
For more insights, please see CBRE’s Europe Co-Living report