So, if you are thinking about investing in the Coliving Market, here you have some data.
Analysis: Challenges & Opportunities
The coliving market has shown itself as being one of the more robust sections of real estate in recent years. It is not surprising that businesses from the hotel industry to vacation rentals are pivoting to coliving. In this article we look at the exciting opportunities that the market offers, bu also some considerations that should be made before investing.
Let us start with the basics.
What is Coliving?
Coliving is a living situation with three or more non-family individuals sharing common residential spaces. This is a modern living model with an ancient history globally. Most cultures have a history with communal living, from African villages to the viking longhouses. Today’s version of communal living is inspired by the need for more flexible and affordable housing. Sharing common spaces with people with similar lifestyles is another incentive for the modern co-liver.
Coliving Market – The data
The market really started to kick-off in 2017-18 and as we are approaching the end of 2021, we are definitely talking about a maturing market with more established actors. However, there is still plenty of opportunity, especially when looking at the long-term prognosis. Globally the market is valued at about USD 8BN today with about 3,5M beds available for digital nomads who are attracted to the lifestyle.
Why will it grow?
- The concept offers a tailor-made housing solution for a growing number of people who have a much more mobile lifestyle due to working on remote.
- It is more sustainable. Sharing resources is the way of the future, and this is no less true for living spaces. A Work/live space also means cutting down on commuting, another source of pollution.
- Changing consumer demands with more emphasis on flexible and simple solutions.
- Changing demographics. The average household size is shrinking with more one-parent families as well as more single households.
- Increasing housing costs in the larger cities. Sharing costs (for communal spaces) is naturally another benefit of coliving that fits the bill for urban dwellers.
- An answer to various population growth challenges. The general global population growth demands new, creative solutions for efficient use of space.
- An answer to the urbanization of the population. By 2050 68% of the world’s pollution will be urban (source the UN).
Covid-effect on the market
A survey by software company the HouseMonk shows that only 6.5% of coliving operators have lost faith in the co-living market as a result of the pandemic. About half of the coliving operators even expanded on their portfolio during the pandemic. Across the globe, operators suffered the consequences of the pandemic. Some markets are taking slower to recuperate, whereas others like the South Asian market is back to pre-Covid numbers. In fact, the co-living market has shown itself to be among the more resilient sections of real estate – a report from Cushman & Wakefield showed that the coliving market performed 23% better than the more conventional real estate market. Moreover, the shift towards more and more remote job opportunities post-pandemic is naturally another trend that is beneficiary for the market.
3 Steps to succeed in the coliving market
1. Choosing the right model
There are two main models for Coliving: 1. Short-term/hotel and 2. Residential. The first, which is the one many hotels have pivoted to during the pandemic, caters to the most nomadic among digital nomads. More and more people work in «the gig-economy», project based and have a need for short-term living. The second model means that the coliving space is the primary residence for the tenant. Both on and off premises factors are influenced by which business model you choose.
2. Transparency of pricing.
At first glance, coliving is more expensive than conventional housing, but that is before «doing the math». When «hidden costs» are added to the equation: Internet, cleaning, maintenance and general utilities, coliving is suddenly a more attractive option. Choosing a pricing model that reflects and highlights how coliving cuts general living costs is a key factor to filling the beds.
3. Choosing the right location.
Convenience is a key factor for the digital nomad, and this means a central location for the coliving space is a given: well connected to transport hubs and to shops and services and coworking spaces (esp. if not offered on-site). However, there is also an opportunity to capitalize on the trend of combining digital nomadism with rural living. Smaller, affordable towns that are well communicated are experiencing a steady increase of younger well educated professionals. This is a trend across the US as well as in Europe, which opens the door for more creative settings for coliving spaces.
At Wooda we strongly believe that we’re only at the beginning of a global housing revolution, and our mission is to help coliving operators match with digital nomads looking for their ideal coliving space.
Are you a coliving space? Check our offers
If you are a digital nomad, become a wooder.
Join our thriving community of digital nomads to get our latest articles beamed straight to your inbox.