Property consultancy Knight Frank’s Horizon Report provides an insight into co-living investment throughout 2024. The report predicts that the pressure on proving feasibility for large scale Build to Rent schemes will motivate investors with higher return hurdles to consider other forms of exposure to living sectors.
Therefore, in 2024, Knight Frank expects the co-living market to expand. Opportunistic private investors, syndicates, and other investors will be attracted to leverage off the same thematics driving Build to Rent, but in an alternative form that offers greater flexibility, the ability to invest at smaller scale, and within the commercial residential planning framework that avoids the GST and MIT complications that can impact the feasibility of the sector.
As the current co-living market is still relatively small and the development sites are not necessarily as large as Build to Rent or traditional Build to Sell sites, it offers a significant opportunity to capture latent demand for a new product type geared towards shorter stay rental accommodation.
The co-living opportunity highlights the different asset types on offer within the living sectors, each with a different tenant mix, tenure length and risk profile. Knight Frank believe that investors will generally choose to specialise in one area in the first instance, but are likely to want to gain exposure across several asset classes, as they build their portfolio to take advantage of emerging opportunities and benefit from diversification.
