Co-living is a rising asset class in real estate, specifically catering to young professionals from 23 to 35 years old who have recently moved to a new city. It offers a turnkey living experience, differentiating itself from other forms of housing, such as student residences.
Features of Co-living Housing Concept
Co-living provides a convenient solution for those in need of temporary housing. Young professionals can avoid the hassle of furnishing and setting up bills, as Co-living spaces come fully equipped. This allows them to focus on their new jobs and settle into their new environment without additional stress.
This housing concept addresses two key challenges in the real estate market.
Convenient Rental Process
Firstly, it streamlines the rental process using digital platforms, eliminating paperwork and unreliable landlords. Co-living companies offer user-friendly online platforms that simplify the rental experience.
Supportive Community
Secondly, Co-living fosters a sense of community. Moving to a new city can be socially isolating, especially without established networks. Co-living provides an opportunity to meet like-minded individuals and build relationships within a supportive community. With shared common spaces like communal kitchens, play areas, and yoga rooms, residents have ample opportunities for interaction.
Co-living optimizes space by emphasizing densification. While individual rooms may be smaller, ranging from 9 to 13 square meters, shared common areas are transformed into attractive spaces with various amenities. This approach is akin to the success of coworking environments, where expansive communal areas offset small private offices.
Challenges Faced by Co-living Providers
Although Co-living may not yield high-profit margins, it offers a convenient living experience. The average revenue per room is around €1000, with operational costs deducted to leave a gross margin of approximately €800. A portion of this margin is allocated to rent, resulting in an average profit margin of about 20% for Co-living companies.
The main challenge for Co-living providers is achieving scalability. Unlike software-based businesses, real estate has limited supply and expansion potential. Successful Co-living companies, like Habyt, have pursued growth strategies through mergers and acquisitions (M&A) to enter new markets efficiently.
In summary, Co-living is an ideal turnkey solution for young professionals seeking temporary housing in new cities. By providing fully furnished spaces, streamlining processes, and fostering a sense of community, Co-living addresses the challenges of traditional renting while offering a unique and convenient living experience. Despite modest profit margins, the demand for Co-living continues to grow as more young professionals recognize the benefits of this innovative housing concept.
This article was contributed by our expert Lucabrando Sanfilippo
Frequently Asked Questions Answered by Lucabrando Sanfilippo
Q1. What innovative features or design elements are incorporated in Co-living housing to enhance the living experience?
Co-living housing incorporates innovative features like:
- Diverse common areas (yoga room, cinema room, communal kitchen, etc.)
- High IoT integration (smart locks, temperature control, storage) and premium, durable design. These elements enhance the living experience by providing residents with various shared spaces, convenient smart technologies, and an appealing, comfortable environment.
The focus on community, convenience, and modern design attracts individuals seeking an elevated living experience beyond traditional residential options.
Q2. How does the Co-living concept integrate technology to offer convenient solutions for residents, such as smart home features or automated processes?
Co-living concepts leverage technology to provide convenient solutions for residents.
IoT systems play a crucial role, offering features like smart locks that can be controlled through codes or mobile apps (e.g., SALTO system), enabling easy and secure access. Additionally, residents can remotely manage temperature settings and enjoy sustainable materials for enhanced comfort and energy efficiency.
Technology integration extends to administrative tasks, with online payment processes eliminating paperwork and allowing residents to conveniently handle invoices, contracts, and other documents through digital platforms.
Furthermore, advanced customer management systems automate ticket routing, ensuring prompt issue resolution by connecting residents with the relevant departments and skilled workers, resulting in quick and satisfactory responses. By incorporating these technological advancements, Co-living spaces enhance the living experience by providing efficient and user-friendly solutions.
Q3. What measures does the Co-living concept have in place to adapt to changing demand and market conditions while scaling its operations?
Co-living concepts employ measures to adapt to changing demand and market conditions while scaling operations. They maintain an advanced sales force utilizing both pull and push strategies, with leads coming from their website, international housing platforms (e.g., Spotahome, Housing Anywhere), and B2B channels.
Flexible lease terms are offered to meet the trend of shorter stays, accommodating individuals who prefer to stay in a city for six months to one year rather than committing to long-term contracts. Co-living spaces are designed to suit remote work needs, providing spacious home office areas and high-speed Wi-Fi. Online processes are streamlined, allowing prospective residents to virtually visit rooms, book easily without excessive bureaucracy, and enjoy flexible check-in and check-out options with just a two-month notice.
These adaptive measures ensure that Co-living concepts can effectively respond to market dynamics while providing convenient and tailored solutions for residents.
Q4. How does the Co-living concept leverage online platforms to enhance the resident experience?
The Co-living concept maximizes the resident experience through strategic utilization of online platforms.
Firstly, sales are facilitated by proprietary websites and partnerships with platforms like HousingAnywhere and Spotahome, allowing seamless room bookings without needing phone calls. Customer support is efficiently handled through email communication, CRM systems, and ticket setups on dedicated apps, ensuring prompt and organized responses to resident inquiries.
Virtual site visits further enhance the experience, as prospective residents can explore their future homes through detailed 3D modeling of the apartments.
Financial processes are simplified with online payment integration, such as Stripe, enabling effortless management of bills, discounts, and reimbursements and eliminating the need for manual input.
By leveraging these online platforms, Co-living creates a seamless and convenient resident experience, optimizing the sales process, customer support, site visits, and financial transactions.
