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Living: future-style

Society is changing; the way we communicate with each other, the way we work and the way we live. The Real Estate industry is responding to and anticipating changes in how people are choosing to live and what people need and expect from the built environment, not least because the success of a project is increasingly measured by its social impact ahead of its bottom line. Change manifests itself in relation to three forms of living; co-living, later-living and multi-generational living. Of course these aren’t the only areas experiencing growth or change, but the common thread is that they are all driven by fundamental changes in underlying human behaviours. 

Co-living

Earlier this year, we wrote about the concept of co-living, the hotel/apartment hybrid where residents enjoy a private en-suite bathroom but share varying degrees of communal space which may include kitchens, living areas and other facilities. As an example of the increased investment into co-living expected over the next 5-10 years and an indication that the obstacles highlighted in relation to this area can be overcome, The Collective has recently announced a new fund, COLIV, with DTZ Investors. They are not alone; JLL has predicted that Europe’s co-living sector will triple in size over the next two years and US based co-living provider, Common, have expressed interest in shared living assets in the UK.

Later-living

A rising median age should be an obvious opportunity for investors and developers of accommodation for the elderly, provided the traditional care home option is treated with caution. Having a greater proportion of elderly people in society does not automatically correlate to demand for care home spaces.

Seniors are now working and active often into their 70s and are not necessarily looking for residential assisted living until much later. Even if this were not the case, the recent collapse of another significant care home provider, Four Seasons, indicates (or perhaps confirms) that there are fundamental flaws in the existing model. The success of a care homes portfolio will ultimately come down to the strength of the operating business, but dependence on income from local authorities is dangerous and vulnerable to changes in public funding. Not only that, cross default provisions that will be familiar to those dealing with and investing in care home structures leave little margin for under-performance at any single location.  

We would therefore expect to see greater interest and investment in alternative forms of retirement living in the form of purpose-built campus facilities, where seniors can live independently in separate units, but with the benefit of facilities such as restaurants and optional care services on site and/or on-site management to coordinate higher care needs as required. This is not necessarily to say that the elderly population will be segregated; supporters of a new model of retirement living emphasise the importance of integrating generations, encouraging a greater level of physical and mental activity for older residents.

Multi-generational living

If developers are tasked with championing social engagement and helping to maintain a society that brings people together rather than segregating them, developing properties that can comfortably house a multi-generational family unit might be something else to consider. 

There are numerous reasons why multi-generational living might be more attractive and/or more necessary now than in previous decades; younger generations are increasingly struggling to get onto the property ladder and private rents in desirable locations may be prohibitively high, older generations may no longer want to live alone but do not require round the clock residential care and modern families may benefit from the support, wisdom and experience that senior relatives are able to provide.

Now more than ever, developers are thinking about how what they create can have a positive social impact. Such positive impact and, often, corresponding success in terms of profitability will usually only be achieved for those schemes which respond to society’s needs and create sustainable structures for the communities within them. As investors gain confidence in the concepts of co-living, alternative later living and multi-generational living, we’re likely to see much more of these in mixed-use developments as well as an increase in the size of developments dedicated to each. 

Explore further topics across our UK Real Estate Horizon Scanning 2020 publication.

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