Investor appetite for co-living is strengthening with a growing number of institutions looking to increase their exposure to the sector over the next year.
New research from Investec Bank plc shows that 40% of investors plan to increase their capital allocation to co-living, while 36% report a positive outlook on the sector.
The findings suggest co-living is moving beyond its status as an alternative asset class, becoming a more established part of the UK’s urban housing mix.
The sector is being supported by structural drivers including housing undersupply, affordability pressures and demand for flexible, professionally managed rental accommodation.
GROWING PIPELINE
More than 9,000 co-living units are now operational across the UK, with a growing pipeline of developments under construction and planning activity increasing year-on-year.
However, the pace of expansion is expected to be shaped by planning complexity, use-class challenges and the ability of developers to deliver schemes at scale.
Jonathan Long (main picture, inset), Head of Corporate Real Estate Lending at Investec Bank plc, says: “Co-living has evolved materially in recent years and is now establishing itself as a credible, institutionally backed segment of the UK Living market.
“The sector benefits from long-term structural drivers including housing undersupply, affordability pressures and sustained demand from renters seeking professionally managed, well-located accommodation with flexibility and a strong amenity offer.”
LIVING SECTOR COMPLEXITIES
He adds: “What is becoming increasingly clear is that the question is no longer whether co-living has a place in the market, but how successfully it can be delivered at scale.
“For investors and developers, execution is now the critical variable.
“That places real value on working with capital partners who understand the operational and planning complexities of the Living sector and can provide funding solutions that support delivery through different market conditions.”
