Living, Differently

The Future of Co-Living in Australia 15 Living, Differently 14 Key Target Markets WHO RENTS IN CO-LIVING? Tenant data from Australia’s largest Co- Living brand, UKO, demonstrates that there is no singular type of Co-Living renter, with the model attracting a broad tenant profile. Within this mix, demand is concentrated among domestic and international young professionals in their twenties and thirties, including those finding their feet in a new city or seeking greater flexibility. This diversity strengthens its appeal to investors by spreading demand across multiple renter groups, rather than tying performance to a single institution or factor, such as a university’s ranking in the PBSA market. For renters, it also creates more interesting and diverse communities, bringing together people from different backgrounds, professions and stages of life. LOOKING BEYOND SYDNEY – WHERE NEXT FOR CO-LIVING? As outlined in the supply section, Co-Living delivery has so far been concentrated in Sydney. But where could the sector expand next, if planning policy was supportive? Combining 26 indicators across rental and housing affordability, employment and target market points to a clear conclusion: the strongest potential for Co-Living is concentrated in Australia’s largest and least affordable cities. High rents help improve scheme viability, while low vacancy and limited wider rental choice strengthen the proposition for tenants, developers and investors. At the same time, high house prices and the deposit barrier are keeping more Australians in the private rental market for longer, with national home- ownership rates declining since 2021, according to KPMG. This is increasing the number of middle and higher-income renters well beyond their twenties, with UKO reporting that 1 in 5 of their tenants are over the age of 35. This trend broadens the potential resident base beyond students and young professionals to mobile workers, recent arrivals and older renters seeking flexibility, convenience and community. Sydney ’s Inner and Middle markets lead, underpinned by housing costs, students and target- market depth. Melbourne claims the next three Using a number of metrics, we have ranked capital cities in terms of the opportunities they provide for Co-Living, with 1=best. Those towards the bottom of the ranking still provide opportunities, however the size of market is smaller than for the major capital cities. Overall positions are calculated from 26 underlying indicators and weighted scores, rather than an average of the category ranks. Source: Savills Research using SQM Research, Cotality, Oxford Economics and ABS positions, with its inner market benefiting from students and migration, and its outer market from economic and demographic growth. Brisbane performs best in the middle ring, where strong housing fundamentals outweigh weaker student demand, while Perth’s inner and outer markets stand out among the regional capitals on rental conditions, migration and growth. Lower-ranked markets may still offer opportunities, but their smaller addressable markets make performance more reliant on local university and employment demand. According to Savills’ rental forecasts, rents across the major capital cities of Sydney, Melbourne and Brisbane are expected to keep rising as household growth and rental demand outpace new supply. Similar pressures are expected to support rental growth in other Australian cities, although they are not covered by these forecasts. This imbalance strengthens the need for additional professionally managed rental product, particularly in markets with large concentrations of single- person households. By delivering smaller, flexible and well-located homes, Co-Living can broaden rental choice for a growing cohort underserved by traditional share houses and self-contained apartments that offer limited opportunities for community. Overall, the ranking points to the strongest Co-Living potential where rental pressure and affordability constraints overlap with migration, students, employment growth and a sizeable single-renter market. Planning certainty, explored in the following section, will be critical to converting that demand into supply. RENTAL MARKET HOUSING MARKET MIGRATION INTERNATIONAL STUDENTS & PBSA SUPPLY ECONOMY AND DEMOGRAPHICS TARGET MARKET FINAL RANK Sydney Inner 4 1 7 1 10 2 1 Sydney Middle 6 4 6 5 8 4 2 Melbourne Inner 5 14 5 3 4 3 3 Melbourne Outer 16 11 3 4 1 1 4 Melbourne Middle 13 6 1 2 3 12 5 Brisbane Middle 7 2 10 13 9 8 6 Sydney Outer 14 9 8 6 2 9 7 Brisbane Inner 1 3 9 15 11 11 10 Brisbane Outer 10 7 11 16 6 13 11 Perth Outer 8 12 4 14 5 6 8 Perth Inner 2 8 2 8 7 16 9 Adelaide Inner 11 5 12 12 12 15 12 Adelaide Outer 12 13 14 9 14 5 13 Canberra 9 15 13 10 13 7 14 Hobart 15 10 16 7 15 10 15 Darwin 3 16 15 11 16 14 16 MAJOR CAPITAL CITIES REGIONAL CAPITAL CITIES 90% of occupants aged 20-40 50/50 split between male and female 20% over the age of 35 Average age is 28-30 Over 60% are employed 47% domestic renters 53% international renters 31% students 65% of initial tenancies are 3–6-month terms typically with one term renewal thereafter 20% of tenancies are 12 months+ Source: UKO