Growth in popularity for co-living
Co-living is attracting growing numbers of young professionals seeking high quality, purpose-built, professionally-managed and flexible rental housing in key UK cities.
In its latest UK Co-Living Spotlight, property company Savills estimates the sector has a potential core target market of 725,000 residents, including almost 160,000 in London alone.
This is compared with a total of just 24,000 operational and pipeline units, demonstrating the scale of the opportunity.
Co-living combines individual studio bedroom units and on-site communal facilities, such as gyms, co-working spaces, resident lounges and cinemas.
They tend to be professionally managed and with an all-inclusive monthly rent.
While the amount of operational stock is currently limited given the nascency of the sector in the UK, a total of £540 million worth of transactions are due to complete in the first half of 2022 alone.
Paul Wellman, associate director, Savills research, says: “We see no end to the rising demand for private rented housing in the UK, a sector which grew by almost two million households, to 5.9 million, between 2011 and 2019.
James Hanmer, head of UK PBSA investment and co-living at Savills, adds: “There is an increasing desire by many to live in urban locations, close to jobs and in schemes that offer a strong sense of community and high quality amenities.
“This underpins our belief that co-living is now set to follow multifamily and build-to-rent and the purpose-built student accommodation sectors, in becoming an increasingly large part of the UK rental market.”
Rental values in co-living schemes are often thought to be at a premium to the wider residential market and therefore only available to higher earners.
However, while tenants renting privately traditionally have to pay council tax, utilities, broadband and other bills separately from or on top of their monthly rent, with co-living a single rental payment includes all these costs.
In some situations, co-living rents can be equivalent to a 20 per cent discount to the full cost of a studio in the build-to-rent market, once all the extra costs like utility bills are factored in.
Paul adds: “For many tenants, having high quality amenities within their building, with everything included in one simple monthly rental payment, more than compensates for a smaller private living space and makes co-living a compelling proposition.”