Investec Bank plc announces the publication of its latest research report, Future Living 4, Volume 2: Co-living – from alternative to core allocation, which explores how the sector is becoming an increasingly established and institutional part of the UK Living* market.
Investec’s research shows that investor sentiment towards the sector is strengthening, with 36% of investors reporting optimism towards co-living and 40% expecting to increase their capital allocation to the sector over the next 12 months.
The report finds that structural housing undersupply, sustained demographic demand and resilient income characteristics are continuing to attract investor and lender interest to co-living. It highlights how the sector has moved beyond its origins as a niche residential product and is now becoming a more recognised component of the urban housing mix, particularly in supply-constrained city centres where affordability pressures and demand for flexibility continue to shape rental choices.
The report also points to the sector’s strong operational fundamentals. More than 9,000 co-living units are now operational nationwide, with planning submissions rising materially year-on-year and a further pipeline under construction, reflecting the growing maturity of the market and increasing confidence in the model. At the same time, the research identifies planning inconsistency, use-class complexity and delivery capability as the principal factors likely to determine the pace of future expansion.
Jonathan Long, Head of Corporate Real Estate Lending at Investec, said:
“Co-living has evolved materially in recent years and is now establishing itself as a credible, institutionally backed segment of the UK Living market. The sector benefits from long-term structural drivers including housing undersupply, affordability pressures and sustained demand from renters seeking professionally managed, well-located accommodation with flexibility and a strong amenity offer.
“What is becoming increasingly clear is that the question is no longer whether co-living has a place in the market, but how successfully it can be delivered at scale. For investors and developers, execution is now the critical variable. That places real value on working with capital partners who understand the operational and planning complexities of the Living sector and can provide funding solutions that support delivery through different market conditions.”
Future Living 4, Volume 2 also examines the next phase of the sector’s evolution, including pricing discovery, the growing importance of amenities and services in driving occupancy and income, and how co-living is continuing to establish valuation evidence as the market matures. The report notes that, while many investors currently see build-to-rent as commanding tighter yields, co-living’s appeal is increasingly linked to its income intensity, particularly on constrained urban sites where higher density can support stronger gross income per square foot, provided resident experience and operational quality are maintained.
Investec continues to be an active funder in the Living sector, having lent over £1 billion to PBSA to date and providing development, stabilisation and investment lending to single-family and multi-family developers and investors. The bank has also become an established funding partner in the co-living market, with clients including Scape, The James and True North.
