The Coliving Revolution in Europe

In a rapidly evolving real estate landscape, coliving has emerged as a dynamic and promising asset class. Recent research by Savills reveals that 51% of European investors are planning to dive into the coliving sector, positioning it as the joint third most attractive living asset class, just behind Build-to-Rent (BTR) and Purpose-Built Student Accommodation (PBSA).

The UK, in particular, has seen a remarkable surge in coliving development. In 2022, 2,000 new beds were completed, doubling the operational coliving beds to 3,422. The trend is set to continue, with an additional 4,999 beds currently under construction.

What's driving this remarkable growth? It's a testament to the changing preferences of residents, especially digital nomads and young professionals. The onset of the Covid-19 pandemic accelerated this shift. In the three years since 2020, plans for 12,150 new coliving beds have been submitted, highlighting the strong appetite from developers, investors, and lenders for this sector.

The UK's coliving sector has expanded significantly, with 25,021 beds either existing or proposed, marking nearly triple the size of the sector compared to 2019. London led the charge initially, with 2,820 operational coliving beds, but now the regions are catching up. Savills predicts that regional markets will be the main driver of future growth, with 6,879 beds under construction or having planning consent, surpassing London's 6,176 beds.

Additionally, as we explore the global landscape of coliving, it's essential to cast our gaze towards Spain, a country poised for remarkable growth in the coliving sector over the next five years. With its captivating blend of rich cultural heritage, vibrant cities, and a booming digital nomad community, Spain is becoming an enticing destination for both residents and investors in the coliving market. Already showing promising signs, Spanish cities like Barcelona, Madrid, and Valencia are witnessing a surge in coliving developments. The country's unique charm and favorable climate only add to its allure, attracting young professionals and remote workers seeking a sense of community and work-life balance. As Spain continues to embrace the coliving revolution, we can anticipate a flourishing ecosystem of coliving spaces, catering to diverse needs and preferences, further solidifying its position as a coliving hotspot in Europe.

Looking ahead, European investors are eyeing coliving with increasing interest. In a Q1 2023 survey by Savills, 38% of investors are already investing in coliving, with 51% planning to target the sector in the next three years. This growth is unparalleled across all living sectors, with a significant portion of investors planning to deploy substantial capital into coliving projects by 2025.

Morgan Scale, Associate Director at Savills Debt Advisory, highlights the changing landscape of coliving financing, stating, "Lenders have quickly understood that the growth of the sector is reflective of a more permanent shift in resident demand for flexible tenancies and social interaction spaces."

Beyond financial viability, coliving brings tangible social value. By providing diverse housing options, often to those with limited choices, coliving promotes social mobility. The emphasis on shared amenities and resident interaction fosters a sense of community and wellness, improving residents' quality of life.

A study by The Collective found that 71% of coliving residents reported an improved social life, making it particularly appealing to millennials who value the social and community aspects of this lifestyle.

The coliving sector is not just a real estate investment; it's a movement reshaping how we live, work, and connect. As it continues to evolve and expand, investors, developers, and residents alike stand to benefit from its unique blend of community, flexibility, and social impact. Welcome to the future of living – welcome to coliving.

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