The co-living sector has gathered momentum recently, in response to the need for high quality, community-led urban accommodation for young professionals moving to urban locations.
The “Europe Co-living: Key Trends and Key Cities” report looks at the economic, social and real estate trends across Europe, which have given rise to this new asset class and the dynamics of six key markets – London, Amsterdam, Berlin, Madrid, Milan and Vienna – where the co-living concept is more established.
In Portugal, there are a few concepts of co-living, although the majority with a reduced number of units, and not purpose-built. However, Portuguese investors are already developing new and large-scale projects, the first two of which opened this year. International operators specialised in these types of units are not yet present in Portugal, although several have already shown interest in our country. Portugal presents the main fundamentals for the development of this concept - affordability, urbanization and social changes - and in this way CBRE expects more co-living projects to appear in the near future.
Affordability: The exponential growth of housing prices (45% since 2013) and stricter mortgage regulations, are making the purchase of houses in Portugal more difficult. Lisbon is one of the European cities where mortgage as a percentage of income ratio is higher and, simultaneously, has increased more over the last 5 years.
Urbanisation: Population living in urban areas in Portugal has increased 20% between 2000 and 2020. In addition, over the last 10 years Portugal has recorded one of the highest employment rate growths in cities in Europe, increasing 7 percentage points. Typically, it is the younger population who move to cities for job opportunities. This younger generation, who demand flexible, central and sociable accommodation, is the primary target for co-living.
Social changes: The average age at which people are marrying and having children has increased, in Europe in general, and in Portugal in particular. In Portugal the average age of marriage was 32 for women and 34 for men in 2019, which compares to 26 and 27 respectively in 1999. Similarly, the age at which Portuguese women are having children has increased, over the last two decades, from 26 to 30,. These key life stages are often a trigger that drive a house-buying decision. As these are being increasingly delayed, it will translate into more people residing in rented stock for longer.
In addition, it is widely considered that the Millennial generation and their successors in Generation Z value flexibility and job mobility much more than their predecessors and, as such, renting is a more natural fit for their preferred lifestyle. In Portugal, the strong increase of foreign workers over the last years leverages the demand for the co-living format due to its flexibility and community environment.
Finally, co-living seeks to address the increasing problem of loneliness. Despite the rapid rise of technology and social media designed to improve connectivity, isolation and loneliness is increasing, especially in cities. According to Eurostat, 8% of people in Portugal do not have someone they can talk to. Interactions in communal spaces such as shared dining facilities, resident events, gym classes and lounge areas in co-living accommodation are intended to help residents foster friendships, conversations and community spirit.
The CBRE team involved in several co-living projects, has an extensive experience in this format. We are available to clarify any questions and support the growth of this emergent asset class in Portugal.