Highlights from a new co-living report on the rental revolution

Harris Associates and VervLife join forces to launch a new resident-focused co-living report that uses real data from residents.

A new co-living report launched by Harris Associates and VervLife on the rental revolution | BTR News
Studio Norm at Wembley Park.

Joining forces, Harris Associates and VervLife launch a new resident-focused report to answer the prevailing questions around co-living. The report uses real data from residents staying in VervLife’s UK operational co-living portfolio comprising over 1,600 studios.

The report delves into both the economic and personal motivations driving renters into this sector.

The heart of co-living: where convenience meets community

Harris Associates and VervLife have united their expertise in co-living investment and operations to answer the question on everyone’s minds – why co-living?

Holistic living experience: The research reveals that 47.7% of respondents opt for co-living due to the simplicity of all-inclusive monthly fees. Gone are the days of wrangling utility bills, Wi-Fi, gym memberships, co-working spaces, and even social events. 

Fostering connections: The second most influential factor, with over 21% of respondents citing it, is the social dimension – and co-living offers the opportunity to meet like-minded individuals. This innovative housing model is the future of community-led living with a marked emphasis on state-of-the-art amenities and co-working spaces.

A paradigm shift in housing: a long-term living solution for all 

Contrary to the prevailing assumption that co-living caters exclusively to postgraduate’s, the comprehensive study unveils an intriguing revelation. The typical resident, with an average age of 28 years, signifies its universal appeal transcending generational boundaries. 

The study also challenges the stereotype that this sector predominantly targets students, as a mere 28% of respondents fall into this category. 

Length of Stay: Approximately 72% of current co-living residents in the UK express their intention to stay for 12 months or more. This indicates a strong demand for long-term co-living arrangements, which, in turn, can translate into more stable and predictable income streams for investors.

Co-living is here to stay: queue investment momentum 

Co-living is viewed in the investment arena as either ‘purpose-built student accommodation (PBSA) +’ or ‘Build to Rent-light’. Yields in the sector sit somewhere between PBSA and Build to Rent at present but are likely to move closer to Build to Rent, giving investors an opportunity for yield compression. The investment characteristics of co-living are similar to Build to Rent, but because this sector is a more nascent sector, investors may be able to benefit from higher yields.

As the institutional funds have raised ‘Beds’ strategies across the spectrum of Living sectors, many larger funds will need to diversify across different use-classes. While PBSA and Build to Rent may be the predominant recipients of this capital, the report shoes that co-living provides an unparalleled opportunity for new entrants to gain a competitive advantage as early adopters. With equity moving away from offices and looking to find new areas for investment, co-living is positioned for a strong investment uptick.

Co-living is poised to revolutionise the housing market, addressing the inconveniences and isolation associated with conventional living arrangements. As per the findings of the Harris Associates co-living report, the UK currently boasts 25,021 co-living studios, all of which are fully occupied, with extensive waiting lists, and a pipeline of 21,599 under development. This growth represents almost triple the expansion witnessed since 2019.

“Co-living isn’t a radical new concept, it represents a reversion to an innate community-centric way of living, reminiscent of the way humans have lived in tribes for millennia. 

“The demand for co-living is fuelled by the housing supply gap, rising single-person households, and the changing lifestyle priorities and preferences of Generation Z and Millennials, and these factors will only increase in prevalence over the coming years. Investors are increasingly recognising co-living as an opportunity area, viewing it as a hybrid of PBSA and Build to Rent. This is an opportune time for investors who missed the early-stage opportunity to invest into the other living sectors.” 

Jenna Harris, Head of Co-living, Harris Associates

The future of living is here 

As we navigate the ever-evolving landscape of modern living, co-living emerges as a paradigm shift, a bridge connecting individuals, and a testament to our inherent desire to establish meaningful communities.

The insights provided in this collaborative report are instrumental in understanding the vital role this sector plays in our contemporary society. Its relentless momentum signals a housing model with limitless investment potential.

Jenna Harris and Brent Stojanovic – through their respective visions – echo a collective sentiment: co-living is not just a housing trend, but a response to the evolving needs and lifestyles of a diverse range of renters. Its potential to help relieve housing supply shortages, foster community, and offer a cost-effective living solution makes it a compelling sector to get behind.

“Co-living at scale will add a new dimension to the UK’s housing mix and VervLife fundamentally believes in its benefits for the people that call these vibrant communities’ home, the developers that unlock them and the investors that back them. The footprint of co-living will continue to grow beyond London. Locations with significant student retention rates, good employment opportunities and a vibrant cultural scene are especially appealing for co-living development. Addressing planning policy disparities and knowledge of the specific operational dynamics of co-living assets will be essential to encourage further growth.”

Brent Stojanovic, Director and Co-founder, VervLife