How the effects of Covid-19 on real estate could boost the shared living sector

Are you one of those people that despite the pandemic, the lockdowns, and the remote working, remained in her/his city almost the whole time? If so, you’re probably like me. I stayed in London, because I love it, and I took full advantage of every small opportunity we had to spend time outside enjoying the city and its unique charm. And even when I couldn’t I still did not leave, nor I thought about doing it.

However, it turns out, there’s a consistent and potentially growing group of people that think very differently. Quite the opposite actually. As soon as they realised they could work and earn the same even from home (and most of us lucky enough to be able to do it, adapted quickly) they left the big metropolises in favour of alternative destinations such as second-tier cities or towns. The situation gave these people the opportunity to experience working life in a more remote and relaxing environment, stay closer to nature, and most of all save quite a lot of money.

So, the changes to our daily lifestyle, and our professional lives have been massive in most cases and this had a profound effect on the real estate market. A recent research by Bloomberg shows how rent prices plummeted in most major cities around the world, while real estate prices have remained almost unaffected.

Source Bloomberg

Naturally, there are two additional important reasons why the rents have gone down so much. One is the job losses throughout 2020. This means that many people were either forced to go back to live with their families or find significantly cheaper accommodation.

The second is the lack of international students as the university courses too were held mostly online.

While part of these effects could disappear fairly soon, the market conditions are not expected to go back to the previous stage, at least for a while. Even with the pandemic being under control in many cities people are still not coming back, but they are opting for suburban regions.

Co-living and Co-working might currently offer the best solution to this issue

Hybrid and alternative living and working solutions were already on the rise before the virus outbreak. However, right now, they could have an even better potential.

Co-living, which was already one of the most successful sectors during this period, could be the best idea to attract young professionals back to the cities, as they would offer a cheaper option and add the community aspect that might be lacking in more remote locations. Spending time within a positive community has proven to be helpful also in cases of mental health risks that have unfortunately increased during the pandemic and have become a central topic to the entire hospitality sector.

The same goes for co-working spaces. A trend already present before (as for many others), could be reinforced. For professionals working remotely, in fact, co-workings, like co-livings do for a community, have the added value of offering a natural environment to develop a network.

The same research quoted before shows how big cities (in this case London, but a similar if not worse situation can be found in New York, Dubai, Singapore, Hong Kong, and Sydney) have not yet recovered. Dwellers have not yet got back to their original activities.

London percentage change in movement from pre-pandemic baseline

Source Bloomberg

In both cases, it’s clear how both designers and managers play a crucial role in the success of a shared living or working project.

Interior Designers have to bring in the local culture to give residents that alternative they are now looking for. Even more important though is developing flexible spaces that encourage a range of activities, community development, and networking opportunities. Communal and lounge areas are a great addition to residential spaces that if well-conceived can add significant value to the overall value of the offering. They represent the best way to fight isolation. In this respect, the proper application of Biophilic Design has proven also to positively contribute to mental health and professional performance.

As for property managers, their role will be more and more to ensure the offer of services that cater to a different audience. People that just now are coming out of a difficult period and developed needs that might be quite different from the ‘pre-pandemic’ ones. Health and safety are of course a major concern now. This topic should then include the facilities offered by the managers but also complementary ones. For instance, it would be a good idea, in the presence of a bar or restaurant, to consider a third party that offers healthy, locally sourced, food choices.

Regarding the activities organisation at the same time, creativity and genuine engagement that doesn’t feel artificial are key.

Last but not least, of course, both co-working and co-living offer a cheaper option to more traditional residential solutions even in cities. So, for those that (like me) don’t want to live far away from the centre of activity, but are looking for a more affordable temporary solution, or a new exciting experience by now, shared-living schemes represent a choice that has to be considered.

Experts still see a full recovery 3 to 4 years away at least. But this paradigm shift could give a major boost to the development of shared living and hybrid working solutions and maybe even new ideas that we haven’t experimented with yet. Much will depend on how Millennials and GenZs approach the post-pandemic period. Which values and new needs will prevail.