For the longest time the dream was always to own a house, a place you could call home. However, it looks like that sentiment has changed.
In the Asia-Pacific region, the co-living market has gained strong traction, especially among millennials and those migrating to the cities for jobs, education and better prospects, which creates new opportunities for real estate developers and investors around the region.
Before we continue, we should go into detail about co-living itself.
What is Co-Living?
The most common definition for Co-living, is a shared housing designed to support a purpose-driven life or a modern, urban lifestyle that values openness, sharing, and collaboration.
The origin of modern co-living may be attributed to the so-called “hacker mansions” of San Francisco, which are spacious houses containing dorm rooms and communal work spaces, where young tech-entrepreneurs could collaborate on start-up projects.
What makes Co-living attractive?
The concept of co-living spaces is not new; however, its modern rendition with a more organised system is. Modern co-living spaces put emphasis on the 4 c’s of co-living:
Convenience: Co-living spaces offer flexible and shorter lease terms, compared to conventional living spaces, and often, monthly lease options. It’s a simple solution that provides a hassle-free, ready-to-move-in space. Co-living spaces are usually fully furnished, with utilities set up and provide cleaning and maintenance services.
Cost: With rising property and rent prices in cities all around the world, it is becoming problematic for people to rent living and working spaces, especially for millennials who are looking for better opportunities. Co-living operators tend to use the space better and reduce underutilised spaces. Co-living may seem to cost more than say, a room in a shared apartment. However, when you take into account the utilities, the fully furnished space, and the high level of cleaning and maintenance services, it more than makes up for the cost.
Community: What sets co-living spaces apart from other living spaces is the emphasis on community. In today’s society, especially in developed nations, loneliness and social isolation are one of the fastest growing health concerns, which is why co-living operators are cultivating communities and more social interactions with people. Most people who go into a co-living space are like-minded and thus get along with each other well, naturally developing a healthy community.
Collaboration: The most common demographics for co-living spaces are aspiring millennials and young people. Co-living residents enjoy the benefits of collaboration that a community brings. In fact, a number of co-working models cater specifically to professions, digital nomads, tech-start-ups, Blockchain communities and so on.
How it benefits investors
The co-living model can be very profitable to operators and investors. Investors stand to benefit from significant savings and working with co-living operators that play multi-functional roles, such as building managers and property managers. It eliminates the need to pay multiple fees to different people. Most operators are asset light and try to work off a profit-sharing lease arrangement or management agreement, while others prefer fixed market based leases. Co-living master-lease structures are less common; however, that structure might expand as the sector grows.
Working with a co-living operator can improve on inefficiencies that may be created by a tenant, such as handling utilities like wi-fi, cleaning services, furniture, television, utensils, etc. There are factors that an operator can make more efficient, providing a win-win situation for a landlord, tenants and even the operators themselves.
What happens next?
The current co-living model is still in its infancy, leaving a lot of room for potential development. The sector is likely to evolve immensely as time passes and will cater to a broader audience in the future. The trend of a more established multi-family market across most of Asia Pacific will also help in the establishment of the sector. It is likely that in the future, co-living will have more market share in the serviced apartment sector, helping to fill the gap of housing for students. More operators will likely enter the market running somewhat similar yet different co-living models which will provide some healthy competition in the sector.
Co-living is the wave of the future in real estate; it is time to get ready for it and ride the wave all the way to your potential investment success.
Want to more information about co-living spaces? Send us your questions and queries to email@example.com or give us a call at 012-299-6155 or 037-450-6655.
Liked what you read? Check out this article next: Here Are The 4 Best Rental Marketing Strategies To Guarantee You Tenants