CORESTATE-Capital-AG
Thomas Landschreiber - Corestate Capital
Thomas Landschreiber, co-founder and CIO of CORESTATE, says: "With JOYN we’re providing our clients with a luxury alternative within the booming asset class micro-living. This is what makes our offer unique in Europe."
Co-living is becoming one of the most sought-after asset classes in Germany as investors tap into popular demand for high-tech accommodation in some of the country’s most burgeoning cities.
As a term, co-living is very broad, because ‘it can encompass anything from student accommodation/WGs to flats with amenities for young professionals and aspiring entrepreneurs’, Dr. Jan Linsin, head of research Northern Cluster at C&W in Germany, told REFIRE.
‘It feeds into the same trend as co-working – it’s about building a service layer on top of the accommodation and creating communities of people who like the same things and share the same values,’ he said. ‘In that sense, co-working and co-living can co-exist successfully. What could work really well is to create co-working/co-living global networks so that someone can have access to both a co-working space and somewhere to stay within the network when they travel. I would certainly use a service like that and I think a lot of other business travellers would, too.’
One thing is certain: investors are willing to bet big on co-living. Luxembourg-based investor Corestate Capital Holding announced in June that it plans to invest €2.4b in its micro-living segment by the end of 2019. The group has already acquired 26 plots for development and properties with more than 7,600 apartments for students, commuters, project employees, entrepreneurs and young professionals. Corestate has already invested €1.8b in the segment. Within the next two years, it is aiming to grow its co-living segment to more than 10,000 units in metropolises, both in Germany and elsewhere in Europe.
‘There are some megatrends driving the demand for micro-apartments across Europe,’ said Thomas Landschreiber, co-founder and CIO at Corestate. ‘Urbanisation is a significant factor. We are seeing population increases in city centres with strong economies that offer good job prospects and excellent universities. These locations are attracting workers willing to travel to find employment and the student population. Micro-apartments are in demand by both groups. We are at the beginning of the cycle in the micro-living asset class. There is a supply and demand imbalance in single-person housing, so for managers and investors, this segment of the market offers real development and investment potential over the coming years.’
Another investor ramping up its exposure to co-living is Berlin-based shared housing operator Medici Living. ‘There has been a massive boom in co-working and people are now very excited about co-living on the back of that,’ Gunther Schmidt, CEO of Medici Living, told REFIRE.‘However, a lot of people jump on the bandwagon and say they’re doing co-living when really they’re just doing resi without any add-ons. At Medici Living, we’re about building communities. We’re like a tech and a community company because that’s where we create value. The advantage of co-living spaces like ours – which are shared apartments/WGs - is that users get to rent a room in a great, exciting location that they might not be able to afford if they had to rent a whole apartment and they also have access to an instant community. All of our apartments are furnished and in a city like Berlin, rooms typically cost around €600 a month, all bills included. We even have our own furniture line – we poached a designer from WeWork to create it.’
Currently, Medici operates 1,800 rooms in Germany, the US and the Netherlands. The shortest lease it offers is three months but there is no upper limit. Around 50% of its tenants are students and the rest are young professionals. The group has just hired Mark Smith, the former CEO of UK sandwich chain Pret A Manger (who led the group’s expansion into the US market) as director of its US operations.
Like Corestate, it has big expansion plans: ‘Our goal within the next 24 months is to be in all major US cities and in all major European cities, too, including Germany’s ‘Big 7’, London, Manchester, Barcelona and Madrid,’ Schmidt said. ‘We’d like to be operating 10,000 rooms by the end of next year.’
According to Schmidt, the group’s aim is to offer accommodation that’s affordable: ‘Our “Quarters” concept offers amenities and services, including communal lounge areas, media spaces and gyms,’ he said. ‘I actually live in one of our buildings in Berlin. We like all of our employees to live in one of our buildings when they come to work for us, at least for a while, to help them to better understand what we are doing and how to improve things going forward.’
Co-living also feeds into the trend of young people becoming increasingly reluctant to buy apartments or cars, according to Schmidt. ‘They want to live in the city centre and buy experiences,’ he said. ‘They want to have options on their doorstep, even if they don’t always take advantage of them. If you live somewhere like ‘Quarters’, you already have access to like-minded people. We actually match people to apartments depending on their shared interests. That way, there are some immediate synergies and people aren’t alone.’
Given their inherent synergies, co-living and co-working are increasingly likely to merge as their popularity grows. In March this year, Medici Living teamed up with flexible work operator Industrious in Chicago to offer a shared space. ‘We operate over 70 apartments with over 175 members on the upper floors and they manage the office space below,’ Schmidt explained. ‘We’re currently in discussions in Europe to operate similar schemes; we’re very open to it.’ (ssk)
