Expo Real 2018: Co-Living for Seniors. Will It Work?
Co-living developers and operators discuss the growing trend of shared rentals at Europe's largest real estate and investment event. Is the niche ready to grow out of its Millennial bubble?
In the sharing economy, co-living is growing hand in hand with coworking due to the customers’ evergrowing need for flexibility. The trend is gaining popularity across the globe and Europe is no exception. Millennials are at the core of the shared living concept, but operators and developers are already building co-living properties for seniors.
The main driver for the rise, according to industry insiders, is social connection. People need to come together, at any age, which makes this form of renting so appealing. Then there’s also the pricing, which is officially recognized as affordable, even though it’s often not the case.
At Expo Real 2018, Matthias Hollwich, co-founder & managing director of Hollwich Kushner Architecture; Amos Engelhardt, executive partner at micro-unit developer i Live Holding; Horst Lieder, managing director at co-living developer International Campus; and Gunther Schmidt, founder & CEO of Medici Living Group, the largest co-living provider in Europe, revealed their predictions on how co-living will evolve and evaluated the flourishing sector’s main drivers.
The concept of co-living started to take shape about three years ago, but it is now on every major residential developer’s agenda, even if just as a side note, an observation of the trend. The segment is growing organically, together with Millennials’ need for flexibility, also reflected by the evolution of workspaces. “I agree that the main driver is the mindset of the Millennials. They are international, commuting all over the world. We can also see coworking in the office sector. The trend is flexibility,” Lieder said.
Strongly linked to the concept of the digital nomad, co-living offers something that many of those always on the move miss—the feeling of home. “Residents are one year in London, one year in Berlin, then New York. If you come to a city and you don’t know anyone, we will give you access to a community,” Schmidt said.
It is this desirability to feel welcome and safe that, in the end, reduces risks for investors. “A community brings the feeling of home. People stay with us, on average, two-and-a-half years compared to an industry average of 16 months. If you give them a sense of community, they will stay longer and the investment is safer,” Engelhardt added.
Co-living for seniors
One of the ideas turning heads and raising eyebrows at Expo Real this year is co-living for seniors. Older generations are dealing with loneliness too and could benefit from the concept. “I believe in communities and really bringing people together. It’s not just about Millennials. They get trends started, but once something is established, it will also apply to other generations,” Schmidt said.
He believes that co-living can house people in various stages of the life cycle. Young families can find it easier to share a babysitter, people with compatible interests can easily find partners for their activities and those looking for a cozy Sunday dinner with new friends can benefit from similar living arrangements.
Responding to the needs of seniors has created some services that, at least at a first glance, might seem a bit far-fetched. “We have a new product for young seniors, people around the age of 55. We have chickens in our communities, which they can care for. Many of them feel lonely and we know that, so we have pets. We will soon provide a dog renting service. They will be able to rent a dog, take it for a walk,” Engelhardt said.
However, not everyone in the industry sees ‘co-living for seniors’ happening. “Co-living is not the solution for everything. Maybe for Millennials, people between the ages of 17 to 35. In Germany, the normal situation for our students was to live in shared flats. We are activating that again, but with spaces in the building for communicating, cooking, studying. We have to develop products for a specific phase in life. For co-living, we are talking about singles, couples or people moving from here to there,” Lieder noted. He also insisted that, in the end, people will value their privacy and safety, opting for traditional housing instead of shared living options.
New trend, new problems
One of the constant issues co-living developers face is closing on financing. Still, they can manage to get creative and work around the problem. “When we started to work on the WeLive project (WeWork’s co-living brand), it was very difficult to convince someone to provide financing. We would say that we would convert the project to traditional housing if co-living didn’t work,” Hollwich said. Other designers and developers would mention similar Plan B options to get past the financing stage by announcing that they would convert to coworking should the initial project fail.
Firms in the co-living sector hope that this mentality will change and that governments will become involved in the financing process. “More than 50 percent of people in social homes are there because of social deficits. If you can address them through solutions such as pets, you would reduce costs associated with keeping people in these homes. This costs more than having services such as pet renting. Maybe we could have capital from the governments at one point. That would help,” Hollwich added.
Speaking of costs, while co-living projects are generally positioned as affordable, the average rent for a co-living unit is 30 to 50 percent higher—depending on the location—than the one of a studio. Landlords justify this through the added value brought by amenity packages and services offered by shared rentals.
Cover image by Thomas Plettenberg / Messe München. Copyright 2018, Messe München GmbH, all rights reserved