Investment in residential alternatives of all types is rising, with big-ticket global residential investment volumes exceeding all retail or industrial investment in the past year, according to new research from Savills.
The latest Global Living report reveals that student housing investment volumes have risen 87 per cent in the past five years, with the provision of purpose-built student accommodation, or PBSA, highest in the United Kingdom.
Savills Australia’s director for student accommodation, Conal Newland, says the supply of new PBSA in Australia was growing in many of the major cities, underpinned by a lack of existing accommodation and strong student population growth.
Savills’ report also outlines the growing popularity of co-living across the globe, which is a more luxurious form of share-housing and extends the convenience and amenity of PBSA to non-student markets. Targeted at graduates and young professionals, as well as students, co-living accommodation offers fully furnished units, extensive amenities, community events, all-inclusive bills and pro-active management.
“As the 20- to 39-year-old age bracket becomes more prevalent in the rental market, the increasing influence of Gen Y’s demand for higher-quality rental accommodation is creating opportunities for developers to provide hybrid co-living developments,” Newland explains.
Newland points to the recently-completed UKO Stanmore in Sydney as an example of a communal accommodation option. Australia’s first co-living residential series, UKO Stanmore emulates similar concepts in Europe, the UK and the US, and offers 33 units. Developments in Newton and Paddington are set to follow.
In Melbourne, Urban Coup comprises 30 households ranging from first-home buyers to young families.
“To make co-living work in many markets, it needs to be dense in order to compete on value with build-to-sell. There are particular planning implications for this, and authorities need to recognise the trade-off between smaller units and larger communal spaces,” Newland explains.
“For investors, the advantage is a diversified tenant base, not solely reliant on students and the success of the local higher education market.”
Comparing co-living to co-working, Newland says the new residential type is “emerging to meet current-day residential occupier requirements, and as the boundary between living and working becomes ever more blurred, we can expect to see greater integration of the two in future.”
Savills also highlights WeLive, a co-living derivative of the WeWork shared workspace group.
“Given the increasing global capital flows attracted to a growing range of residential investment opportunities, Australian lawmakers should be mindful of passing legislation that may reduce the attractiveness of investments, or this country may run the risk of becoming less attractive to millennials and Gen Zs looking to study, live and work here,” Mr Newland said.