Co-living is a term for a contemporary housing idea in which single people or small groups of people share living quarters, usually in urban locations. It is intended to respond to the growing demand for housing alternatives
that are affordable, adaptable, and community-focused, particularly among young professionals, digital nomads, and students.
In a co-living arrangement, people share common spaces like kitchens, living rooms, and occasionally toilets while maintaining their own private bedrooms or micro-apartments, which are frequently equipped. These communal areas have been carefully planned to promote social contact and teamwork among residents, strengthening a sense of community.
In addition to standard amenities and services, co-living communities may include co-working spaces, gyms, laundry facilities, cleaning services, and common dining rooms. To encourage connections among residents, some co-living places also provide events, workshops, and social activities.
Co-living has several advantages, including affordability because costs are split among tenants and the ability to rent for a limited time. It provides an alternative to conventional flat living and is a desirable choice for people looking for a more connected and communal way of life.
It is important to keep in mind that because there are so many different operators and models on the market, the precise arrangements and services offered by co-living spaces might vary.
In the UK, the most prevalent form of Co-Living exists in HMOs – i.e., Houses in Multiple Occupation. These are traditional detached, semi-detached or terraced houses across the UK, which have been converted or modified internally to house multiple persons not belonging to one household, or sharers. HMOs are vastly used by students and young professionals. A small minority of them are used by divorced or widowed adults, singles and couples of state benefits, and asylum seekers as well.
Rent received from tenants in the UK from 2000-2021
Another form of larger co-living space in the UK are PBSAs, or Purpose-Built Student Accommodation. These are newly built blocks sometimes containing as little as 20 rooms or flats and some of them run into a few hundred rooms. In the past 20 years, tens of thousands of PBSA rooms have been added nationwide.
Types of Co-living around the World
Co-living arrangements come in a variety of forms, each of which meets a distinct set of requirements and preferences. Here are a few prevalent forms of co-living:
1. Co-living Spaces/Communities:
These are specially constructed homes made for co-living. They have private bedrooms or little apartments with communal spaces. Co-working spaces, gyms, and social areas might also be offered in co-living communities.
2. Co-living apartments:
In this arrangement, a number of people or small groups rent a single flat and share it. Typically, each tenant gets their own bedroom, and they all work together to manage the obligations of the shared space.
Co-housing refers to a situation in which a number of people jointly own or rent a building with separate living quarters and communal areas. Residents contribute to the upkeep of the neighbourhood and actively participate in decision-making.
4. Co-housing in Traditional Housing:
This is the practise of two or more people sharing a traditional home or flat with shared expenses and duties. Compared to specially designed co-living places, it may be a more informal arrangement.
5. Co-living for students:
These arrangements offer shared living quarters and amenities close to universities or colleges and are made exclusively for students. They provide a friendly setting for students to live and learn together.
6. Senior Co-Living:
Senior co-living communities offer shared housing to older people who prefer it. While providing independent dwelling units, these communities also provide possibilities for socialising, interdependence, and common activities.
7. Co-living for Digital Nomads:
As remote work and digital nomadism become more popular, co-living places have been designed specifically for these lifestyles. These areas offer amenities that are suitable for remote employees, as well as short-term leases, flexible agreements, and other services.
It's crucial to remember that, depending on the area and market demand, various co-living arrangements may not be as popular or readily available.
Benefits of Co-living
Co-living has a number of advantages that draw people to this type of dwelling. The following are some major benefits of co-living:
Co-living is more affordable than renting or buying a whole flat or house because participants can split the costs. Individuals can access more attractive places while saving money by splitting expenses like rent and utilities.
Co-living environments are created to promote a sense of community and social interaction. Living with people who share your interests provides chances to make friends, network, and work together on various initiatives. Residents are able to connect with one another because of the communal spaces and planned social events.
Co-living spaces offer features like fully furnished rooms, community kitchens, co-working areas, gyms, laundry facilities, and housekeeping services. These amenities improve the inhabitants' quality of life by saving them time and effort.
Many co-living options allow residents to rent on a temporary basis and offer flexible lease periods. For those who value mobility or have erratic or shifting housing needs, this flexibility is especially appealing. Long-term commitment is removed, and it grants the ability to quickly adapt to changing circumstances.
3. Shared Responsibilities:
People who co-live together might divide up household chores, including cleaning, upkeep, and even cooking. By spreading out the job, each person is less burdened and has more time for other endeavors.
4. Diverse viewpoints and learning possibilities:
People from different backgrounds, cultures, and occupations come together through co-living. Living in a diverse society exposes people to various viewpoints, promotes cultural interchange, and opens doors for personal development and learning.
Co-living communities generally offer a supportive atmosphere, especially in types like co-housing or senior co-living. Residents can get company, support, and help when they need it, which makes them feel secure and at home.
5. Environmental Sustainability:
By making the most of shared amenities and spaces, co-living encourages resource efficiency. Because of its communal living arrangements, shared appliances, and energy-saving practises, it can help reduce its impact on the environment.
It's crucial to keep in mind that the advantages can change depending on the co-living model, the particular neighborhood or setting, and the preferences of the people involved.
Co-living and fractional investing
As investors, developers, and operators look to diversify away from traditional real estate assets and into the "living" sector, there is a rising pipeline of co-living properties around the UK. A number of variables, such as a persistent housing shortage, a rising population, urbanization, reducing household sizes, and shifting consumer attitudes, support the investment opportunities
Here are some of the main factors that make co-living an increasingly appealing investment possibility from the standpoint of investors:
Co-living is addressing an increase in demand for adaptable and affordable housing options, particularly among young professionals, students, and millennials. There is a demand on the market for more accessible and affordable housing options due to the rising cost of living and housing shortages in many major regions.
2. Adapting lifestyles and preferences:
People's preferences for experiences and communities are becoming more and more important in how they live and work. Co-living provides a distinctive way of living that encourages interaction with others, teamwork, and shared experiences. People looking for convenience, community, and a sense of belonging will find this communal living concept appealing.
3. Potential for higher rental yields:
When compared to conventional residential homes, co-living properties have the potential to produce better rental yields. Co-living operators can raise the money earned per square foot by maximising the use of space through shared utilities and adaptable room arrangements. Cohabitation can be a profitable investment choice because of the increased revenue potential.
4. Scalability and economies of scale:
Co-living residences offer scalable business models that enable effective resource utilisation and economies of scale. Benefiting from centralised management and common services, operators can manage several units within a single building or across multiple locations. This scalability may result in more efficient operations, lower costs, and higher profits.
5. Innovative technology and increased operational effectiveness:
The co-living sector makes use of technology to boost operational effectiveness and promote resident satisfaction. Energy management systems, resident portals, and automatic access control are a few examples of smart home technologies that help streamline operations, cut expenses, and improve tenant satisfaction. These technological developments may increase investors' interest in co-living spaces.
6. Real estate market diversification:
Investing in co-living is a chance to diversify a real estate portfolio. Investors can spread risk and possibly profit from various market cycles and trends by combining co-living properties with traditional residential, commercial, or industrial assets. A complementing asset type with the potential for steady returns and a distinctive value proposition is co-living.
7. Favorable regulatory environment:
Some towns and municipalities are adopting policies that are supportive of co-living since they see its advantages. These rules might involve zoning adjustments, lowered entry barriers, and expedited approval procedures. An advantageous regulatory setting can give investors more assurance and confidence in the co-living industry, making it a desirable investment option.
Co-living offers great financial opportunities, but like any investment, it also involves risks and necessitates proper due diligence. Before making any investment decisions, it is crucial to conduct in-depth market research, evaluate the financial sustainability of certain projects, and take into account the standing and performance of co-living operators.
Co-living offers appealing investment options
because of a number of important features. Co-living is a desirable choice for investors due to the increased demand for adaptable and inexpensive accommodation, changing lifestyles and preferences, and the possibility of better rental yields. Along with new technologies and operational savings, co-living facilities also provide scalability and economies of scale, which raise investment possibilities. Additionally, co-living benefits from a favourable legislative framework in some regions and offers diversity within a real estate portfolio. To assess market viability, financial viability, and the reputation of co-living operators, investors must, however, do in-depth study and due diligence. Co-living has become a compelling investment opportunity that is in line with changing housing patterns, has the potential for steady returns, and offers a distinctive value offering.