UK: Real estate advisor Savills is predicting rapid growth of the UK coliving sector and says it will see deals worth £540 million in H1 2022.
The company says coliving is attracting “growing numbers of young professionals seeking high quality, purpose-built, professionally-managed and flexible rental housing in key UK cities”. The potential pool of demand far outweighs existing and pipeline supply, according to Savill’s latest analysis.
In its latest UK Co-Living Spotlight, the firm estimates that the sector has a potential core target market of 725,000 residents, including almost 160,000 in London alone – this is compared with a total of just 24,000 operational and pipeline units, demonstrating the scale of the opportunity.
Savills says an all-inclusive monthly coliving rent can be around 20 per cent lower than an equivalent BTR studio, once additional bills are accounted for.
While the amount of operational stock is currently limited, £540 million worth of transactions are due to complete in the first half of 2022 alone.
James Hanmer, head of UK PBSA investment and coliving at Savills, added: “There is an increasing desire by many to live in urban locations, close to jobs and in schemes that offer a strong sense of community and high quality amenities. This underpins our belief that coliving is now set to follow the multifamily/BTR and PBSA sectors, in becoming an increasingly large part of the UK rental market.”
“We are now seeing the debt market become increasingly comfortable with coliving and the pool of lenders is widening. The Savills Capital Advisors team expects to have secured around £500 million of debt for the sector by the end of 2022,” said Morgan Scale, associate director, Savills Capital Advisors.
London has led the way in the emergence of coliving, but over the past three years 60 per cent of units submitted for planning are for outside the capital. The total operational and future pipeline now stands at 24,000 units, split 50/50 between the regions and London. Some of the regional markets with the largest pipelines include Birmingham, Manchester, Sheffield and Glasgow.
