What is co-living and why it is not another name for HMO
a brief exploration of the co-loving concept
Since 2015, global investment into coliving developments has each year increased threefold.
Image Credits: Colonies
Co-living seems to have become, for many, another name for an HMO conversion. Since the difference is substantial and the name is being largerly misused, I though it would be useful to share my late research on Co-living spaces.
In this brief article, I will explore the differences between co-living and HMO, highlight the main features of Co-living spaces, and the possible difficulties of implementation as an investment strategy.
I will then touch on who the target market for such developments is, and where you should look if you are thinking of investing in co-living spaces.
sharing of common values, philosophy, and culture (without compromising individuality)
Co-living and HMO: are they one and the same?
Since 2015, global investment into coliving developments has each year increased threefold.
But what is really Co-living and how is it different from an HMO?
I would say that the main difference is that, while an HMO is a room in a shared house where the diversified tenants’ background tend to drive to isolation and individuality, Co-loving houses are, on the contrary, based on the philosophy of social experience through sharing of common values, philosophy, and culture (without compromising individuality).
Though this might seem a difficult distinction to implement logistically, investors developing co-living spaces know exactly what it is that co-living spaces need to have to qualify for the label.
Building the Co-living concept: the must-have features and fundamental attributes
While co-living developments may vary in terms of interior design and the range of amenities on offer, they all have the same basic characteristics: offering less personal space in favour of large shared kitchens and lounges. They also offer social spaces like gyms and cafes. Some co-living development go so far as to having the added benefit of a coworking membership in the rent, while others offer regular community events.
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planning permissions and co-LIVING
Co-living developments might have up to 250-bed builds and while the focus still needs to be on ensuring attractive communal spaces and central, easily accessible locations, they are an ambiguous use class. The latter is important, as there are various legal obstacles around minimum size, rents, and lease lengths.
The appeal, from a developer’s point of view, is that the blurring lines between other asset types means you can apply for residential, hotel, or student housing use (depending on local market conditions).
Since, at the moment, co-living definition is grey area it means that on one hand there is flexibility while, on the other hand, there are critical obstacles to obtaining planning permission. The difficulties seem to be also exacerbated by cities clamping down on short-term lets such as Airbnbs…
However, as developers get to grips with licensing for particular projects, there is prediction of co-living to be a much more prominent feature of the urban residential market in the next ten years.
Image Credits: Forbes
There are various legal obstacles around minimum size, rents, and lease lengths
who is they target market?
Co-living seems to fulfill the market needs of the single-person household. The typical renter is the 20-30 year old (student or professional) who is seeking first-class accommodation with facilities and like-minded people. Co-living responds to not just a necessary logistic request (a place to live in) but the psychological need for both high-quality and a community feel. It is the shift of a younger generations increasingly looking beyond the traditional flat shares or studio apartments. Leases can last anywhere from a month to a few years.
where to develop co-living spaces
Having appeared out of nowhere, co-living is becoming increasingly successful across Europe’s cities.
Since 2015, global investment into coliving developments has increased threefold each year. At present, the UK, Netherlands and France are Europe’s largest coliving markets, but Germany is catching up.
Co-living has significant growth potential in cities where there is pressure on urban land use and the affordability of housing. It is no wonder that coliving developers are branching out from Europe’s capitals to vibrant regional cities.
In the UK, over half of all coliving units are in London. However, they have recently branched out in Manchester and Leeds.
In Europe, a similar trend see Co-living spaces developers moving from capitals to vibrant regional cities: Rotterdam, Hamburg, Frankfurt, Krakow… Europe’s secondary cities where there is plenty of growth potential.
With less competition for sites than in capital cities, regional cities offer the opportunity for larger developments at lower cost, provided that planning permission can be obtained.
Image Credits: Mason&Fifth
While co-living developments may vary in terms of interior design and the range of amenities on offer, they all have the same basic characteristics: offering less personal space in favour of large shared kitchens and lounges.
IN CONCLUSION
Co-living are not HMOs: They have their own structural characteristics, ubiquitary social characteristics, quality features, and their own specific planning regulations.
Co-living projects have transformed the concept from affordable housing to a lifestyle choice over the past few years.
The sector is moving away from the redevelopment of existing buildings to purpose-built institutional scale product with a greater average bed count.
This new development concept seems to be well on the way to be an integral part of the portfolio of many bigger developers in both, Europe’s capitals and regional cities, offering strong economic growth and a young population.
I hope this article has helped clarify the confusion between co-living and HMO concepts.
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