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Coliving as an institutional asset class

Updated: Apr 29, 2020

Real estate investors watch coliving carefully, curious to understand whether it can generate better rental returns than traditional leases do. But the majority still see coliving like an alternative investment use for residential, when operate in size or portfolio that could be defined “commercial”. Actually notwithstanding all the buzz around the concept the size of investment is 4bln, way less than other sub-class.

This market is evolving fastly and some fact-checking is needed to comprehend the business, the stability and develop a track record. The final step is to have some transaction of buildings operated as coliving or developed for coliving use.

When some funds dedicated to the sector start to be launched you could understand that a sort of maturity is embracing the asset class.

DTZ Investor launched a coliving fund called COLIV with 758m cap, while other players like Patrizia AG and AXA Real Asset will include some coliving investment in their residential funds.

In other direction but showing a further recognition in the investment world, in 2019 Alta’s developer (building operated by Ollie) managed to replace the building’s construction loan with permanent financing from SG and Deutsche Pfandbriefbank, reflecting the confidence of traditional lenders in this new coliving operator model for residential buildings.

More and more coliving projects proved that that model can provide better financial results but it’s still seen with diffidence and as a niche. We are conscious that there are some pitfalls or better some doubts to be checked (we will dedicated another post to this theme) but we believe also that the domand of coliving is driven by demographic, technological and lifestyle changes that impact a growing portion of population. It’s wrong to assume that coliving’s operating model applies only to the customer it currently serves. The future evolution points to a bigger shit in the way all residential asset are operated.

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