Commercial real estate service provider Cushman & Wakefield has released co-living insights from its Australia Alternatives report.
In 2023, the Australian co-living sector witnessed an increase in capital markets activity following several years of subdued activity.
The most significant deal across Australia’s co-living sector in 2023 was PGIM’s investment into TRIBE Hotel’s Australian co-living strategy. This collaboration is set to establish a portfolio of co-living assets valued at up to AUD $750m, Cushman & Wakefield found.
Operators originating from the hospitality industry have been most successful in terms of co-living platform creation to date. These groups often have strong lifestyle and community branding expertise, alongside familiarity with managing intensive accommodation operations.
On a global stage, the co-living model has proven to be well-suited for cities grappling with extreme affordability challenges. Within the Australian context, this has predominately been Sydney.
While developers have gravitated to Melbourne for Build to Rent projects due to the increased availability of sites for scale rental products, Sydney has remained the key focus for co-living activity, with the operational model typically most suited to cities with strong transient corporate workforces and exceptionally high rental rates.
Cushman & Wakefield predicts that while high quality and well managed co-living portfolios are well placed for outperformance, there is a more limited growth trajectory for sector expansion compared to other living sectors.
Co-living is likely to remain a sub-set of broader product offerings across key hospitality and living sector players which can provide broader platform operational efficiencies.
