5 reasons why you also should invest in co-living spaces.
Updated: Feb 28
Co-living is becoming gaining traction with digital nomads, entrepreneurs, young families and increasingly seniors as well. This triggers an interesting opportunity for investors looking to diversify their portfolio with stable revenue generating assets.
Let's take a closer look at the most important benefits of investing in co-living properties.
1. High Rental Yields
As prices continue to increase in the property market, the demand for co-living arrangements is growing as it provides a more affordable option for many.
By renting out separate rooms to each tenant, it creates a higher rental yield than a normal rental property.
So not only do the tenants benefit from a sense of community and cheaper housing costs, the investor has a higher rental yield.
2. Multiple Streams Of Income
In addition to a higher rental yield, co-living properties also mean multiple streams of income. Usually when a tenant leaves, there may be a vacancy period where the property owner is not earning any rental income.
Instead with co-living, if one room is vacant, the other rooms will likely still be occupied. One tenant leaving does not mean the investor is left without a rental income for the vacancy period.
Co-living spaces typically offer various additional amenities to their residents, such as co-working spaces, fitness rooms, a bar, ...as well as a vaste program of networking and community building activities. While some of these will be included in the basic rental fees, quite often some of these will be charged additionally, creating supplementary revenue streams as well.
3. Maximise ROI
With these incredibly innovative properties you can maximise on your return on investment. You essentially have the same maintenance costs as a regular rental property, including management, with the extra income.
Rather than having to maintain and pay for multiple rental properties, you just have one that provides you the same benefits.
4. Global population growth is driving the demand for housing
Below are some interesting statistics on population growth over 20 years in nine major cities worldwide that have led to the rising demand for housing.
This exponential population growth can be seen in comparison to the forecast statistics that the World Economic Forum published in 2016 which predicted the growth of the world’s 10 largest cities by 2030.
5. Housing prices and income are a worldwide concern
As such, there is a huge demand for housing with high population growth and a supply shortage. Part of the reason affecting the shortage is that housing prices globally have outpaced incomes in most countries.
The IMF released information in June 2021 detailing this discrepancy between housing prices and incomes. This is a striking graph as it conforms that housing prices worldwide are becoming more expensive over time.
In fact, about 50% of earth’s population is unable to afford to buy a home. To find a place to live, more people are turning to the rental market to meet these housing needs.
The shift from a buy-to-own mindset to a buy-to-rent mindset is gaining momentum.
Housing costs and population growth are promoting different ideas on residential living spaces and bringing it to the forefront.
The emergence of the co-living housing market can’t be underestimated, as the concept of shared housing and informal ‘paying guest’ accommodation has combined to formalise a new way of living.