Real Estate Insights

Introduction

Welcome to a data-driven exploration of London’s co-living and build-to-rent (BtR) sectors. Our journey begins with a close examination of the numbers—demographics, migration patterns, earnings, and housing preferences.

These figures form the foundation of our analysis, allowing us to unravel the intricate dynamics of supply and demand in London’s co-living and BtR developments. Join us as we uncover the critical insights that these statistics provide for the future of housing in this vibrant city.

Net Inflow and Outflow of Residents

In the dynamic realm of London’s real estate market, understanding the net inflow and outflow of residents is pivotal to deciphering housing demand trends. Data from 2020 reveals intriguing insights:

Age Group	Net Migration (Inflow-Outflow)
0-4	-14,780
5-9	-11,649
10-14	-6,365
15-19	-10,543
20-24	24,043
25-29	2,376
30-39	-35,645
40-49	-16,586
50-59	-10,746
60-64	-3,804
65+	-3,341

These numbers depict a nuanced picture. While London experiences an overall net outflow of residents, it’s noteworthy that the 20-24 age group shows a substantial net inflow of 24,043 individuals and the demographic 25-29 is the only other age range which also has net inflow. This demographic trend has far-reaching implications for the co-living and build-to-rent sectors.

The inflow of young professionals and students in the 20-24 age bracket suggests a growing need for flexible and affordable housing solutions, such as co-living arrangements. These individuals seek housing options that align with their transient lifestyles and budgets.

Conversely, the net outflow observed in the 30-39 and 40-49 age groups calls attention to potential challenges in retaining mid-career professionals and families within the city. Understanding these trends allows developers to tailor housing solutions that cater to the specific needs of these age segments.

Age Demographics and Housing Needs

In the context of co-living and build-to-rent, age demographics play a pivotal role in shaping housing preferences and requirements. London’s age distribution is a key factor to consider:

Age Group	Average Annual Earnings (2023)
18-21	£20,837
22-29	£30,092
30-39	£38,415
40-49	£42,508

It’s evident that earnings tend to rise with age, with the 40-49 age group having the highest average annual earnings. However, the housing landscape is not solely determined by income. Affordability, lifestyle, and housing preferences vary across age groups.

Less than a third of Londoners aged between 20-39 own their homes, compared to 41% of people the same age across England. This disparity is indicative of London’s unique housing challenges.

In 1990, 57 percent of homes in London were owned by someone aged between 25-34, falling to 29 percent in 2019. This underscores the evolving housing needs of younger age groups who increasingly turn to rental and co-living options.

These age-related dynamics are crucial for developers in the co-living and build-to-rent sectors. Tailoring housing solutions to the specific preferences and economic realities of each age group is essential for meeting London’s evolving housing demand sustainably.

Housing Supply Landscape

Current Supply in Co-Living

In the realm of co-living, London has witnessed a remarkable transformation. Let’s delve into the present landscape:

Existing Co-Living Spaces: As of the latest data, London boasts a significant presence in the co-living sector, with 2,820 operational co-living beds. These spaces cater to a diverse demographic, providing an alternative housing solution that emphasizes community and flexibility.

Looking ahead, with 21,599 co-living beds in the pipeline, and BtR developments poised to grow, London’s housing landscape is set for transformation. These projects align with the needs and preferences of the city’s diverse demographic.

Key Players: Several key players have made substantial contributions to the co-living market in London, pioneering innovative approaches to urban living. Names like Folk (Sunday Mills, Palm House, and Florence Dock), The Collective (Canary Wharf and Old Oak Common), Mason + Fifth (Italian Building), Ark (Wembley Ark) and Node (Brixton) have redefined housing expectations, fostering a sense of belonging and shared experiences among residents.

Current Supply in Build-to-Rent

The build-to-rent (BtR) phenomenon has reshaped London’s housing market, offering residents a plethora of options:

Build To Rent Developments: Analyzing the current landscape reveals a thriving BtR sector. With 10,313 build-to-rent homes completed, this segment has garnered considerable attention and continues to grow year on year.

Meeting Housing Demand: BtR projects are more than just buildings; they represent a response to the evolving housing needs of Londoners. These developments offer modern amenities, flexible leasing arrangements, and a commitment to community living.

Based on the latest data from the British Property Federation (BPF), as of October 2023, there are 14,700 build-to-rent (BTR) homes in the planning pipeline in London. This represents a slight increase from the 14,300 homes in the pipeline at the end of Q2 2023.

Meeting London’s Housing Needs – The Co-Living and Build-to-Rent Imperative

As London’s housing landscape continues to evolve, a mathematical and data-driven analysis underscores the compelling demand for co-living and build-to-rent properties, positioning these segments as integral components of the city’s real estate market.

Demographics and Housing Needs

The demographics of London reveal a critical nexus between age groups and housing preferences:

In the 18-24 and 25-34 age brackets, where the population stands at 775,829 males and 1,225,240 females, a sizable cohort seeks housing options that align with their young professional and student lifestyles.

Further analysis of average earnings indicates that individuals in these age groups are at stages where affordability, flexibility, and community-oriented living are paramount. With earnings ranging from £20,837 to £30,092, these individuals are well-positioned for co-living and BtR arrangements.

According to the Office for National Statistics (ONS), there are 1,373,000 people in London who live with parents or in shared accommodation as of 2021. In 2021, 45% of all 20 to 34 year-olds in London lived with parents or in shared accommodation. This is up from 36% in 2011.

These statistics alone provide a very clear picture of the need for housing in this age demographic.

Net Inflow and Outflow Dynamics

The net inflow and outflow dynamics, especially within the 20-24 age group, also paint a compelling picture:

24,043 individuals within this age group have chosen London as their destination. These newcomers are prime candidates for co-living and BtR properties, seeking housing solutions that seamlessly integrate into their urban lives.

In contrast, London experiences a net outflow in the 30-39 and 40-49 age groups, emphasizing the need for housing solutions tailored to the young professionals and families who opt to stay within the city.

Affordability and Lifestyle Preferences

The demand for co-living and BtR properties is underscored by London’s affordability challenge:

With average house prices soaring to £534,000 and a house price to earnings ratio in London of 12.5, it’s clear that traditional homeownership is increasingly elusive for many.

Young professionals, students, and those in the early stages of their careers are drawn to the affordability and flexibility offered by co-living and BtR properties. The income-to-cost ratio in these housing segments aligns with their financial realities.

In Summation

In the intersection of these factors—demographics, net migration, affordability, and supply—lies a mathematical validation of the demand for co-living and BtR properties. London’s young professionals, students, and residents are seeking housing solutions that reflect their lifestyles and financial realities. Co-living and BtR developers are well-poised to meet these demands, fostering communities and providing affordable, flexible, and modern living spaces.

The co-living and BtR segments are not just responses to a changing market; they are catalysts for London’s continued growth, supporting the city’s diverse population and enriching its housing options. As developers and investors in these sectors continue to innovate, the mathematical equation of supply and demand is very clearly imbalanced. The numbers speak for themselves Co-living and Build to rent are not just trends; they are integral components of London’s housing future.