Co-living services are still quite new. In Europe, the number of beds (a yardstick that established itself due to similarities with the hotel industry) in mid-2019 amounted to around 23,000, either already in use or under development. This is small compared to the overall housing market, but the segment is growing at a breathtaking pace. 60 percent of these projects have emerged in the past two years alone, as the JLL European Coliving Index shows. The segment is clearly expanding rapidly, led by London and Amsterdam. However, co-living has also picked up considerably in Berlin and Hamburg, which now account for around 5 percent of European co-living offerings and developments.

And this may be just the beginning. Demographic changes are bringing forth these new housing models. Urban dwellers already account for a large slice of the European population, but their share will grow further to 81 percent by 2050. Many will be under-30s with jobs that require them to find flexible, affordable living space. In short, co-living is probably still far from peaking.

“Co-living presents housing investors with an attractive opportunity to add new risk-return profiles to their portfolios. The economic argument for co-living is that it combines high square meter rents with moderate absolute rents and allows rapid rent adjustments due to the relatively short leases – albeit at the cost of a generally higher vacancy risk,” explains Kortmann.

The success of co-living will largely depend on how well it is tailored to each property. And on housing trends in cities in general. In the end, long-run demand will determine the model’s economic viability. Given the ongoing trend toward urbanization and the high likelihood of persistent housing scarcity, it seems likely that demand will be stable.