Nobody could have imagined that our world would be turned upside-down in the way we’ve seen in recent weeks. It’s hard to predict when a pandemic will hit. That’s why businesses and organisations the world over are now focused on trying to work out exactly how these circumstances will affect them going forward.
In the world of PropTech, questions are being raised about how its flagship models will react, and one of these is co-living.
Personally, I believe that co-living is a highly resilient model, built to last. To satisfy pent-up demand, major cities around the world require models that can provide high-quality rental housing. The question for investors is a simple one – what makes a co-living space crisis-proof?
1. Long-term rentals
Over the last few years, co-living has essentially been split into two different models: short-term and mid- to long-term. It seems fairly evident that Covid-19 removes the short-term model from the equation and significantly strengthens the hand of mid- to long-term rentals. Some of the players who are more focused on short-term rentals will be forced to turn their strategies on their heads, or at least complete their portfolios with rental models that are more stable in the current climate.
2. Community over loneliness
In recent years, it seems many shared apartment operators have jumped on the co-living bandwagon and devoted all their energy to the ‘living’ part while paying little attention to the ‘co’ part. However, community is one of the cornerstones of co-living. And now that thousands of people are living under lockdown at home alone, it has become more important than ever. In the mid to long term, players who place a greater focus on the concept of community will ultimately triumph.
3. The right price
Momentum forces us to strike a balance between price and comfort offered, while mediocrity does not tend to fare well in times of crisis. With the rental housing market expected to expand, renters will become ever more demanding. And the ability to provide a first-rate service at the right price may well prove an unbeatable combination.
Choosing the right location for your co-living space is crucial. As is the case with rental duration, finding a location that keeps the seasonal impact to a minimum is vital – some players focused on short-term rentals for example tend to own properties in tourist hotspots. In the immediate future, location will be everything.
The co-living model is inextricably linked to the housing market, therefore by growing this business model you are ultimately growing your portfolio of assets under management. As a result, it can be a big investment. At a time when liquidity is more important than ever for companies, the most ‘asset-light’ models will prevail. In other words, models that are less dependent on product will fare better than models that have a greater amount of asset risk.
Closely connected to the previous point, technology is rapidly shifting from an option to a necessity. Co-living is a highly operational model and firms who are able to use technology to increase their efficiency will undoubtedly be more successful.
CEO & CoFounder – LIVO