I saw an interesting news piece in this week's Estates Gazette (16 November 2019) - a student developer has entered the "co-living" sector with a 5-site portfolio acquisition valued at £350m+. On top of this, that developer has launched a co-living business and identified a 1,700 bedroom pipeline of opportunities as part of a targeted investment strategy. What could co-living mean for the Living Sector?
This isn't a new concept - Karel Teige, a Czech artist and critic, was writing in the 1930s about ideas of community and collective domestic labour, with a democratisation of housing bringing together different ages, generations and classes for a common purpose. The Danish side of my family tells me that this has been common in Scandinavia for years - and maybe it's just the UK catching up with some wider ideas around living together over home ownership.
Offering consensus-based decision making rather than just a roof over your head differentiates co-living from bed sits, and this is a sector asset class that is clearly starting to attract real interest from institutional investors. I can see that it's going to attract increasing interest from existing Living Sector participants looking for a differentiator, and we may well see sector stakeholders increasingly interacting with one another and coming together to share ideas and expertise, for mutual benefit.
This is all the more timely because of the growing interest in "multigenerational households", the notion of more than two generations living together (by circumstance or design) - an area that Cambridge University, for example, has actively researched, and their output makes interesting reading. We're all familiar with the concept of "boomerang living", where an older child may return home for a period as a result of personal circumstances. However, there's increasing academic evidence that this is becoming more structural and longer-term - and can be driven by ageing populations, cultural preferences, worsening housing affordability, and later household formation by younger children, just as much as the traditional drivers of divorce and unemployment. What we're seeing is agency driving this accommodation structure - conscious choice is overtaking accident of circumstances.
So, what does this mean for the Living Sector? We're seeing an increasing realisation that - while there clearly remains a place for traditional "housing" - there is a growing and significant demand for accommodation strategies (and businesses) that can cater for consumers who don't want or can't afford a 2-up 2-down semi in the suburbs, and who want something more than "digs". People are increasingly choosing to live collectively, where they have a say in how their accommodation is run and where they can opt in and out of additional services in a flexible way, and where they aren't living in an age or educational monoculture.
There's more too. For the sector stakeholders who have experience in property management - like the Registered Providers - this opens further opportunities to sell that expertise to co-living operators and investors. The Registered Providers have experience in running large, complex, multi-tenure housing management operations, and could be well placed to sell those skills to the new housing operators - and to think about providing co-living services themselves - to generate some commercial cross-subsidy for their core affordable housing activities. In a balanced, risk-managed, and consensual way, this could be a winner for everyone involved. Co-living has come a long way in recent years, and it clearly has further to go.
Watch this space - living is a hot topic, and change is coming hand over fist.