The young and the elderly are shaping demand for some of the industry’s fastest growing asset classes, according to a new report.
It’s long been a popular offering in the overseas market, but co-living is expanding in Australia as a new alternative in renting.
And what’s attractive about the offering? Quality accommodation in urban locations with access to amenities all while offering a sense of community, items the latest Savills' Global Living report says both Gen Y and equity-rich empty nesters are seeking.
The report says student housing has paved the way for how a specialist property investment can become mainstream.
The global report found student housing investment volumes surged 87 per cent in the past five years, with the provision of purpose-built student accommodation (PBSA) highest in the UK.
Due to Australia’s own strong student population growth and a lack of existing accommodation, Savills Australia’s director for student accommodation Conal Newland says supply for new PBSA is also growing in Australian capital cities.
“The market is now responding to under-served occupier groups by offering new residential models.
“As the 20- to 39-year-old age bracket becomes more prevalent in the rental market, the increasing influence of Gen Y’s demand for higher-quality rental accommodation is creating opportunities for developers to provide hybrid co-living developments,” Newland said.
By 2030, 20-39 year olds will comprise 23 per cent of the developed world’s population. Those aged over 65 will have risen to 23 per cent. Understanding the demands of these groups matters as they become major real estate occupiers.Savills Global Living
Australia’s first co-living residential series, which echoes similar concepts in Europe, the UK and the US, was UKO which launched in Sydney’s inner suburb Paddington last month by hotel group Veriu.
Co-living accommodation offers fully furnished rooms or units, amenities, community events, and all-inclusive bills.
Startup operator Caper Co-living recently launched an additional two co-living offerings in Newtown and Petersham, both inner west Sydney locations.
“For investors, the advantage is a diversified tenant base, not solely reliant on students and the success of the local higher education market,” Newland said.
"To make co-living work in many markets, it needs to be dense in order to compete on value with build-to-sell," Newland said.
“There are particular planning implications for this, and authorities need to recognise the trade-off between smaller units and larger communal spaces."
Hero image: Danist Say Peng.