Top 9 takeaways - Javier Caro on Coliving

By Michael Steinmann

In our latest podcast episode, we invited Javier Caro, Coliving Director at CBRE to speak with us about current trends in coliving, where the market is going, and how to get your foot into the investment door.

Don’t have the time to listen to the full episode? Read through the main takeaways below.

Here are the top 9 takeaways from our conversation: 

  • Coliving is not a trend, it is the future. Not only  is this true when it comes to how we will live in the future, but also from an investment point of view, since the fundamentals for coliving are very strong. Office or hospitality may go through a crisis, but you will always need a place to live!  
  • Get clarity on your exit to get more traction with investors - Investors,like  VCs, typically operate with an investment horizon and expect a certain return over that period. This means that the more clarity you have around your exit scenario and data points to back up your story, the higher your chances of landing the investment are.     
  • There are still great opportunities in Spain today. Tier I  cities like Madrid and Barcelona are very competitive, so if you are looking to enter the coliving market in Spain, go beyond these locations. It is the Tier II cities where the opportunities still lie. Alternatively, look for underperforming buildings- hotels that were running at lower than 60% occupancy even pre-covid, bigger residential schemes- not at top locations, but with good transportation links and more spacious houses of 200m2 or more, and/or offices that are standing empty - those could all be excellent opportunity for your first coliving location.  
  • NOI for coliving is higher than residential living - Coliving has proven to deliver a higher net operating income (NOI) which, even given the higher operating expenses , results in a more profitable set-up compared to traditional residential living schemes. As coliving assets are ultimately valued comparable to other asset classes, this makes coliving a very interesting asset class for everyone.     
  • Location, location, location is the past – While location was everything in real estate in the past, this has started to shift towards a blended prioritisation of location, experience and community. Operators that understand this shift and cater to it are riding this wave to unknown highs, while everyone else risks their own future.  
  • The next wave of coliving demands come from local people – Not everyone knows about the opportunities that coliving offers yet. With more and more local people discovering the possibilities and advantages coliving offers, the next wave of coliving demand will be from locals. And once that demand hits, there will be no turning back- making coliving the biggest opportunity in Europe for the next 10 years!
  • Shorter lease terms are not a risk - Some investors look at coliving and its shorter lease terms as a considerable risk. However, the data shows that good operators are able to fill empty rooms within 24hrs, as most operators have a waiting list filled for the next 3 months. So with demand shifting increasingly towards flexible lease terms, the risks as well shift towards focusing on the dying demand of long-term leases.      
  • Being scalable is primarily about getting the technology right – Technology is a powerful tool to save time and increase profitability. In the past early pioneers needed to develop their tooling in-house. Today, there are great options out there that you can just plug into your business for it to be scalable from day 1. This also significantly speeds up your timeline as you can skip entire funding rounds and can get to the proof of concept faster.   
  • Demand for coliving is far from being satisfied - Currently, there are about 1k beds in the major Spanish cities. This will grow to 3-4k beds over the next 12 months. But demand by far outperforms even such an increased supply as there is enough potential for coliving of a couple of thousands beds in every city in Spain.