Structural housing undersupply is pushing UK living investors towards co-living, with 40% planning to increase their capital allocation to the subsector over the next year, according to a report from Investec Bank.
The report reveals that structural housing undersupply, sustained demographic demand and the subsector’s resilient income characteristics are continuing to attract investor and lender interest to co-living.
The bank’s research shows that 36% of investors were optimistic about co-living and 40% expected to increase their capital allocation to the sector over the next 12 months.
More than 9,000 co-living units are now operational nationwide, with planning submissions rising materially year on year and a further pipeline under construction, reflecting the growing maturity of the market and increasing confidence in the model, the report concludes.
“Co-living has evolved materially in recent years and is now establishing itself as a credible, institutionally backed segment of the UK living market,” said Jonathan Long, head of corporate real estate lending at Investec.
“The sector benefits from long-term structural drivers including housing undersupply, affordability pressures and sustained demand from renters seeking professionally managed, well-located accommodation with flexibility and a strong amenity offer.”
He added: “What is becoming increasingly clear is that the question is no longer whether co-living has a place in the market, but how successfully it can be delivered at scale. For investors and developers, execution is now the critical variable. That places real value on working with capital partners who understand the operational and planning complexities of the living sector and can provide funding solutions that support delivery through different market conditions.”
Investec is an active funder in the living sector, having lent more than £1bn to purpose-built student accommodation to date and providing development, stabilisation and investment lending to single-family and multi-family developers and investors.
The bank has also become an established funding partner in the co-living market, with clients including Scape, The James and True North.
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