As urban centers experience housing pressure across the world, coliving has become a popular concept for both property investors and operators. According to a JLL report, the global fundraising in the Coliving space has increased by 210% annually since 2015.
There are many reasons investors are bullish on the co-living housing type - a combination of serviced apartments, student housing, and community management. Coliving provides solutions to problems created by the limited resources in urban centers including rent affordability, the lack of flexibility in lease terms, and increased social isolation. How effective can shared-living address these growing concerns? Is the growth driven by real demand or momentary fad? And what would the future look like for the co-living sector post the current pandemics?
Solving the housing affordability crisis in urban centers is the core thesis of coliving. However, from examining the numbers, coliving units hardly offer any affordable alternative. In locations of high demand, a bedroom in a coliving facility would cost the same, if not more than a studio flat. On a per sqm basis, coliving costs far more than a regular rental. A one-bedroom unit at WeLive’s Wall Street location costs $3,845 per month, while a studio costs $3,175 (both include private beds, bathrooms, and small living areas).
Land prices in condensed urban hubs and the costs of attractive amenities left little room for affordability. Coliving is the new luxury for millennials. It is more than anything, a lifestyle choice. According to the JLL report, there are three common factors of locations that show the strongest demand for coliving units: high rent prices, high education level, and younger population (JLL report Europe coliving).
Coliving facilities also take pride in cultivating communities among its residents. It’s the WeWork model in living. The leading operators such as Common and Quarters organize community events daily, offering a shortcut for people to break into a new city. However, the sustainable effect of coliving in combating the loneliness epidemic is yet to be proven with more data and research.
The gig economy has put a high price tag on anything that offers convenience. And coliving has served the nomads well. Hassle-free leasing, consistent services, and high-quality amenities are by far the most attractive features of coliving. In turn, intensive operations present the biggest challenge for property operators. We will see further consolidation of operators as the market demands higher quality services.
What lies in the future of co-living?
One of the most asked questions is, how would people perceive coliving post the pandemic? If one could choose to have its private garden, a home office, and a nice social space within their own home, they would certainly opt for more space after the lockdown. Tight private spaces in coliving units do not seem appetizing if you’re locked down for a few months. We foresee that operators will adapt and provide more units that make people feel more comfortable at home, but of course, nothing comes for free. More private space in a shared living facility will push the already high living expenses even higher.
When millennials become homeowners, would small units with shared amenities be the future of owner-occupied housing as well? Coliving operators seem to think that homeownership is a thing of the past. The question is not how to accommodate people who want to own their own homes, but is to expand and accommodate the demand from the growing number of renters. Nevertheless, some companies are already exploring the coliving version of condominiums with the concept of tighter private space in exchange for great shared amenities.
Qualive develops homes for young families in Porto with shared amenities and services. The condominium of Dom Pedro Quinto is designed to be 2-3 bedroom flats, with great privacy and a central guesthouse, which prioritizes the condo owner’s needs to host visitors. We believe young families who need to balance professional life and personal development, that owning a large family house becomes less attractive. Dom Pedro Quinto is the first development in Porto, Portugal that taps into the unmet demand of young professional homeowners. Our guesthouse contains a breakfast terrace, a pool, and six guest rooms in a carefully restored historic manor. The homes are designed with outdoor space, private entrance, and an efficient layout.