Co-Living: Branded Dormitories or a Viable Asset Class?


If the last five years were dominated by the discussion of the viability of build-to-rent in Australia, the next five look set to shift to the rise of co-living.

Purpose-built for the vivacious young professional urbanite, co-living was ranked as the third “hottest sector” in real estate for 2020, according to the Urban Land Institute’s emerging trends in real estate report.

And while living with strangers in dorm-like apartment buildings may not seem particularly sexy, the asset class has grabbed the attention of both the local multi-res developer and major institutional investors alike.

Savills national director Conal Newland says that the sector has gained momentum during the coronavirus pandemic.

“Interesting conversations are starting to occur around the experiences of Covid-19 and how these operational asset classes have performed during the pandemic.

“While the co-living sector is still in its infancy, increasing development costs and relative housing unaffordability are providing a more than viable launching pad for the sector in Australia.”

Newland will be speaking at The Urban Developer’s upcoming co-living and build-to-rent vSummit, presenting the opening session on the emergence of co-living as an asset class in Australia.

Related: Experts Unpack Benefits of Build-to-Rent, Co-Living

▲ London co-living start-up The Collective repurposed student accommodation to launch a 550-unit project in West London.
▲ London co-living start-up The Collective repurposed student accommodation to launch a 550-unit project in West London.

Leading the way for the development of a co-living market in Australia is Sydney outfit UKO and Singaporean group Hmlet, both of which have a number of sub-50 bed assets and a small pipeline of projects under way.

As is the case with the sector’s older siblings—purpose-built student accommodation and build-to-rent, operational real estate classes grow as economies of scale start to emerge.

“We tend to see first-stage smaller developers deliver assets in a fragmented way to meet the perceived gap in the market, which is then followed by a period of mergers and acquisitions,” Newland says.

Bigger international players, like London’s The Collective, have already kicked off major funds—the developer partnered with real estate investment manager DTZ Investors for a £650 million (A$1.2bn) raising in October.

Meanwhile, Hong Kong’s Weave and American brand Open Door are rumoured to be looking to roll out portfolios in Sydney, Melbourne and Brisbane.

The Urban Developer’s upcoming co-living and build-to-rent vSummit is Australia’s first online conference dedicated to the emerging sector.

Register for The Urban Developer’s co-living and build-to-rent vSummit.

Thursday, 23 July 2020

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