Cushman & Wakefield identify top UK co-living cities

Recent data released by real estate company Cushman & Wakefield has identified the top co-living growth hotspots in the UK.

Cushman & Wakefield has released its latest set of data that highlights the top UK co-living cities, with London ranking highly | BTR News

According to Cushman & Wakefield’s latest data, London, Manchester, and Edinburgh top the list of UK cities with the biggest growth potential for co-living accommodation. This helps highlight the structural changes underpinning investment in the emerging residential subsector.

The number of UK households in private rented accommodation has grown from 3.9 million in 2011 to five million today and is forecast to increase further. Due to a growing population and affordability constraints in the owner occupier market, the supply of rental properties is not keeping pace. Average rents have risen by 10% in the last 12 months and 35% over the last five years, while utility bills have also soared.

Therefore, the appeal of the co-living model has increased – self-contained units with living and bedroom space, a small kitchenette and ensuite bathroom, in purpose-built blocks with additional communal space – where rents typically include bills and work out cheaper in some markets.

Communal facilities range from larger kitchens and common rooms to gyms, cinema rooms, terraces, laundry rooms and co-working space, while lease lengths are also more flexible than in the Private Rental Sector (PRS).

Demand drivers also include overspill from the student market due to undersupply of purpose-built student accommodation (PBSA), higher quality accommodation than the wider private rental market where 23% fail to meet the Decent Homes Standard.

RankUK CityRenters aged 18-35 earning £40k+Annual Rental GrowthStudent to bed ratioPost graduate numbers20-34 year old growth forecastsAverage Rank
1London35%14%2.5118,1057%2.0
2Manchester27%16%2.015,4257%2.6
3Edinburgh36%17%2.717,305-3%2.8
4Bristol21%9%2.913,16511%3.0
=5Brighton27%8%2.45,0458%3.2
=5Cardiff24%10%2.310,9557%3.2
7Glasgow15%15%2.426,305-6%3.4
=8Birmingham15%11%2.015,4208%3.6
=8Leeds19%7%2.112,4508%3.6
10 Leicester 10% 8% 1.7 8,985 11% 3.8
Top 10: Co-living growth potential [Source: Cushman & Wakefield Index (Experian, Realyse, HESA/C&W Student Data, ONS)]

Cushman & Wakefield analysed key demand metrics across the 18 cities with the current highest number of private renters aged between 18 and 35, including: the proportion earning over £40,000; PRS annual rental growth; student-to-bed ratio; post-graduate student numbers; and forecasts for population growth of young adults between now and 2040. 

London topped the rankings, outperforming for post-graduate student numbers, renters aged 18-35 earning over £40k, and student-to-bed ratio. These strong metrics, alongside the difficulty of buying a property, explain why London is the leading co-living market to-date with 2,300 complete co-living units, 2,400 units under construction and 5,600 in planning.

The metrics vary by borough, with Kensington & Chelsea (60%), Hammersmith and Fulham (12%), Wandsworth (11%), Westminster (57%), and Tower Hamlets (55%) having the highest number of renters aged 18 to 35 earning over £40k, and Tower Hamlets (11%) having the strongest population forecast for young adults between now and 2040. 

“Co-living is extending beyond London and gaining traction in various regions, and we expect that to continue. Outside London, Manchester’s co-living pipeline leads the way, while there are several notable complete schemes in the regions including Zinc Works in Bristol, The Gorge in Exeter, Scape in Guildford, and Voder Riverside in Leeds. As the cost of debt eases, the market adjusts to recent changes in building regulations, and planning regulations become clearer, we expect co-living investment to rise rapidly. Alongside the demand metrics we’ve focused on to predict future growth potential, it is important to consider land availability, planning, build feasibility and affordable housing agreements. These factors will have a major influence on where the co-living market will evolve.”

Millie Todd, Head of UK Living Research & Insight, Cushman & Wakefield

Manchester was second, outperforming for renters aged 18-35 earning over £40k (27%) and annual rental growth (16%). However, the student to bed ratio in Manchester sits below the national average at 2.0, suggesting overspill from the student market for co-living may be lower than elsewhere.  

Edinburgh was third, a leading city for renters aged 18-35 earning over £40k (36%), annual rental growth (17%), and student-to-bed ratio (2.7). Both seventh in the rankings, the data indicates that Edinburgh and Glasgow are robust student markets with high student-to-bed ratios and a substantial post-graduate population.

Both cities have also experienced a significant rise in international students over the past two years, with an additional 12,550 in Glasgow and 7,085 in Edinburgh.