Co-living: Is now a time of opportunity for the sector?
This week, SEC Newgate UK hosted a networking breakfast event followed by a panel discussion about the prospects of the coliving sector as part of the latest instalment of our Property Talks series.
Moderated by SEC Newgate's David Scane Director, Advocacy, the panel featured renowned experts in the UK co-living space, including Allsop’s Chris Theodosiou, Partner in its Residential Valuation team; HomeViews’ Co-Founder and CEO Rory Cramer; Katherine Rose, Managing Director of VervLife, and Harry Manley, Head of Planning at Halcyon Development Partners.
The conversation addressed a number of key topics, including the reasons why co-living has been growing at such a fast pace, the tenant demographics such developments typically attract, as well as some of the common misconceptions surrounding co-living, and the direction the sector’s expected to take in the coming years.
Our key takeaways:
Is co-living on the up?
Cautious optimism was expressed by the panellists when discussing the performance of the co-living sector. It was suggested that co-living and BTR schemes remain attractive for property investors due to the increasing demand for alternative living arrangements, driven by a variety of factors, including the rise of interest rates and the decline in the number of buy-to-let landlords currently active in the market. Counterintuitively, the cost of living crisis hasn’t hampered the sector – on the contrary, many tenants consider co-living to be good value thanks to its ability to offer all-inclusive packages with no hidden costs which makes it easier to budget.
Co-living developments have been particularly popular amongst young graduates (often city relocators), allowing for a smooth transition from purpose-built student accommodation (PBSA) and making it easy to meet other young professionals. Unlike multifamily housing, also known as build to rent (BTR), co-living offers shared kitchens and smaller units, making it more affordable and thus more accessible for those not yet ready to move into a BTR scheme.
The talk highlighted that London currently leads the way and has the highest number of operational co-living assets as well as the biggest co-living development pipeline in the UK (according to some estimates, some 82% of the UK’s operational co-living spaces are in the capital). In early 2023, 10,000 more co-living homes were either under construction or in the planning stage in London.
What are the common misconceptions surrounding co-living?
Despite the sector’s growing popularity and appeal to consumers, it is still little understood and treated with caution by the government and local authorities, some of which view co-living schemes as a 'glorified HMO'.
To planners, councillors and members of the community co-living can still feel like an alien concept, and little is being said about how such schemes contribute to the wellbeing of local communities, whether through the provision of shared amenities or charity initiatives organised by the residents with the help of building operators.
However, we are now seeing attitudes starting to change, and the pandemic has played a major role in demonstrating co-living’s power to bring together communities and improve people’s day-to-day experiences.
What’s next for the co-living sector?
Many believe that accessibility will play a key role in co-living’s future growth in London and commuter towns. The sector is well positioned for expansion given the acute shortage of housing the UK’s been experiencing for the past decades, which is unlikely to be solved any time soon in light of the scrapped housing targets. The key to making co-living a success story is accurately communicating its value proposition to stakeholders – be they investors, developers, local authorities or communities.
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