Co-living - reactivation in new realities
The pandemic has changed the way we live and work. We still do not know whether these changes will be temporary or permanent in nature and whether they will stay with us, even when the threat of the disease is behind us. The uncertainty of the new and unprecedented situation has impacted all real estate sectors to a lesser or greater extent. Sharing of space, which is one of the key principles underpinning co-living, appears to be the absolute opposite of pandemic isolation. Contrary to appearances, this type of accommodation where in addition to sharing space residents also share a set of interests and values may be an easier and more enjoyable way of staying in quarantine, especially for lonely people and those living far from their families. Małgorzata Dziubińska, Associate Director at Cushman & Wakefield, says about co-living in the new reality.
Co-living is a brand new concept in Poland, but it has great growth prospects. The warehouse and office markets are booming at the moment and the retail market is becoming increasingly saturated and gradually adapting to the new post-pandemic reality. This is pushing developers and investors in the direction of alternative investments such as rental apartments, student housing, co-living projects for young professionals and serviced apartments for seniors.
“Co-living projects can be an attractive alternative to traditional types of accommodation and a solution to the shrinking availability of lands in central locations of large cities. The growth of this real estate sector is likely to be fuelled by the sharing economy driven by new technologies, the ongoing digitisation, urbanisation, demographic shifts, as well as the growing environmental awareness of consumers, and their financial motives” – says Małgorzata Dziubińska, Associate Director at Cushman & Wakefield.
Today, work is intertwined with private life, and we increasingly operate in the online realm and communicate via instant messaging apps and social media platforms. Remote work is also being embraced by growing numbers of employees. Co-living, where creating and living in micro-communities plays a special role, can reduce both the sense of loneliness and the risks of related mental and physical illnesses. Co-living does not offer a product, but it offers experiences, an idea, a lifestyle and a sense of belonging to a community, that is values which are particularly important in today’s world.
"The impact of COVID-19 is well felt over all of our business aspects, the macro-economic changes already started to make their effect on the co-living sector. The trend of "working from home" - with Facebook and Google announcement and more international corporates to follow, we anticipate a possible impact on the transient labour force of the 21st century. The closed borders, the current travel restrictions and the unclarity with regards to air travelling soon, we had to consider a strategic change. We chose to look at the opportunity and re-frame our value proposition towards Polish young professionals. In a time where your home is your office, we offer the possibility to work without leaving your building, and still keeping the social and atmosphere changing benefits. We also had to shift from real events to digital content offerings and have an additional part on check in's with regards to the importance of keeping the precautions- in your private space and in the community areas. Even though there is a negative impact on our occupancy rates, we receive daily inquiries from hotel owners that want to shift the operating model of their asset- it will undoubtedly boost the presence and development of the co-living sector." – says Yoni Karako, Co-Founder, C.E.O. Vonder.
PBSA is a very prospective sector in Poland due to insufficient numbers of beds in student houses that currently can accommodate just about 10% of all students. A substantial majority of beds are provided by state-owned student houses that are largely old buildings offering between two- and four-bed rooms with shared bathrooms and a shared kitchen in the corridor.
Due to the coronavirus pandemic, occupancy rates in student houses have dropped temporarily. However, the situation is expected to return to normal in the long term and high-quality private student housing will enjoy unwavering popularity among students, both foreign and Polish.
“Poland currently offers approximately 127,000 beds in student houses, of which just under 6,000 in privately-held schemes. This means that only 10% of all students can be accommodated. The market therefore has a strong capacity. In my opinion, due to the coronavirus pandemic, private student housing may turn out to be an even more sought-after solution on account of transparent lease conditions, the high quality of services, attractive amenities, safety and stability. This sector will also be attractive to investors. It is perceived as a defensive sector in times of recession, because young people are more willing to study then, delaying their entry onto the tight labour market. Unfortunately, a vast majority of Polish student houses, especially state-owned student accommodation, are a synonym of poor quality. Market research has revealed that when choosing accommodation young people look mainly at the value-for-money aspect. Modern student houses such as LivinnX Krakow are an answer to their needs. It offers 710 beds and 2,000 sq m of amenities – so a lot more than just a sleepover. Both Polish and overseas students are interested in such accommodation. Attractive prices, the development of student exchange programmes and an opportunity to study in English are just a few factors attracting other nationals to come and stay in our country. The number of foreigners studying in Poland stands at almost 73,000 and is expected to grow in the long term despite the coronavirus pandemic.” – says Jakub Bartos, Head of Residential at Golub GetHouse.
While the global lockdown and the reduced mobility of people during the pandemic constitute the key challenge for co-living projects for young professionals and student housing, in the case of senior housing the virus itself is the biggest threat. Given the changing demographics and ageing society, there is a need for solutions that will enable the senior housing sector to grow while ensuring high-level safety for senior residents.
“Out of concern for the health and safety of our residents (seniors, many of whom have health conditions that make them extremely vulnerable to coronavirus), ORPEA Polska cancelled all visits to its care homes in early March. We also introduced internal procedures to ensure protection against the risk of COVID-19 infections and to provide guidance on what to do if there is a coronavirus case in our care home or rehabilitation clinic. The lack of visits and separation are very painful for both our patients and their loved ones. That’s why our therapists and psychologists attach special importance to enabling communication with families. We do our best to have as many telephone and video calls as possible as they have a therapeutic power – such conversations have a positive effect on how our seniors feel, cheer them up and give them strength, and our patients and residents feel genuinely moved. Such operations as ‘Telephone meetings through the glass’ or ‘Visits on an aerial platform’ are other forms of meetings we organize in our care homes. Such meetings were previously held by a care home of the ORPEA Group in Belgium. We have decided to follow these good standards also in Poland.” - says Beata Leszczyńska, President of ORPEA Polska.
Ensuring safe conditions for residents by taking appropriate hygiene precautions and introducing good practices in shared spaces will be key to the further growth of co-living projects not only in Poland, but worldwide. To support and develop a brand, it will also be absolutely necessary to continue to build a strong community and to meet the challenges associated with a deteriorating financial situation of many community members while ensuring high-quality spaces, amenities and services. New technologies and more social media presence can help gain loyalty of current and future tenants. After a period of social isolation, the need for belonging to a community may become even stronger and the flexibility of co-living that enables a quick response to the changing market needs may be its additional advantage.
More information on growth prospects of the co-living sector in Poland and on alternative real estate investment and financing is available in Cushman & Wakefield’s report “Co-living – a new era for the real estate investment market in Poland”.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. In 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWakeCE on Twitter.