Living, Differently

Apt. Residential, Meadowbank Living, Differently The Future of Co-Living in Australia 26 27 THE INVESTOR/DEVELOPER Puian Mollaian Investment Director, Apt. Residential Q. What is driving interest in Co-Living relative to other living sectors such as Build to Rent and PBSA, and how do you see this evolving? A. We are observing a global thematic push for exposure to the living sectors, with Co- Living seen as a complementary strategy alongside Build to Rent and purpose-built student accommodation (PBSA), rather than a substitute. In some, but not all, instances, Co-Living helps unlock sites not feasible for Build to Rent or PBSA due to planning, delivery, or market demand, and is increasingly well-received by customers seeking all-inclusive, affordable, and flexible living options. At our Meadowbank project we have incorporated a Co-Living tower alongside Build to Rent to optimise design, maximise yield and broaden the rental pool. Q. What are the key characteristics you look for when identifying viable Co- Living sites, and how does this differ from other living sectors? While Co-Living was once limited to central locations, market acceptance has broadened, with affordability and proximity to employment, infrastructure, and key institutions remaining essential. Local demographic is an important factor. It is important to understand who your tenant will be. We have facilitated outreach efforts to healthcare institutions and associations to accommodate key workers. We see strong demand for Co-Living near hospitals and universities, and anticipate potential for partnerships to address staff accommodation needs. Q. First generation stock has historically been of a smaller scale, with some pipeline projects being of larger scale, how do you see optimal project scale evolving as the sector matures? A. There’s certainly been upward pressure in terms of the optimal scale for future Co-Living pipeline. There has been a shift towards 100+ unit Co-Living schemes, with some market examples reaching 200 to 300 units, driven by the need to justify overheads and provide quality service. There is a need to align communal space and service offerings with project scale, ensuring a community feel and liveable spaces beyond individual units. Our Broadway project is an adaptive re-use of a historical building, with unique design, generous unit sizes, and a boutique, aspirational brand targeting young professionals rather than students. Q. What are the primary risks you consider when investing in Co-Living, particularly in relation to leasing, operational performance and exit liquidity? A. It is important to control and monitor operational budgets, especially as rent is often all inclusive with utilities. We are able to do this using efficient building systems and technology such as sensors to minimise leakage. The secondary trading market for Co-Living assets is in a nascent stage. There is a need for institutional-grade product, and the gradual emergence of market evidence through transactions and capital raises to help determine what is an arm’s length fair value for this type of asset. Q. Where do you see capital for Co-Living coming from over the next cycle, and what needs to change for the sector to attract deeper institutional investment? A. The most recent Co-Living projects have been funded by value-add and opportunistic capital with shorter investment horizons and higher return requirements. Attracting longer-duration, income-focused core capital is essential to developing a liquid secondary market and making Co-Living a more investable asset class. Industry education is also important. Demonstrating a proof of concept, operational expertise, and market depth are critical for institutional investors, with only a handful of operators currently able to manage Co- Living assets at scale. Attracting longer- duration, income- focused core capital is essential to developing a liquid secondary market and making Co-Living a more investable asset class.