Co-living is not going to work in the UK's big cities, but in the midsize cities it is already showing yields of up to 20%.
That is according to Studios24 Director Barry Glantz, the man behind the UK's first provincial co-living scheme, who is on the brink of agreeing a £7M financing deal to complete his Wolverhampton project.
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The deal will unlock the door to longer-term funding arrangements, which will lead to his next schemes in Coventry, Solihull and Leicester.
But he said the wisdom that argues co-living can only work in bigger cities like Birmingham, London and Manchester is mistaken.
The Studios24 — an £11M co-living scheme in Wolverhampton with 201 beds — is close to agreeing a £7M funding deal with a club of lenders to fund the second phase. A £4.5M deal with Manchester-based Asset Capital funded the first phase of 93 rooms.
“When we first started talking to funders it was difficult, they couldn’t see the co-living concept,"Glantz told Bisnow. "A year or so later people could understand the concept but only in London because the project was backed by the residual value of the property, but couldn’t see it working somewhere like Wolverhampton. But I put money in, and we had backing from Assets Capital, and now funders are starting to phone me up, it’s a real change in mood.”
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The new deal with high street banks and mainstream lenders will pave the way to future developments.
“We have a couple of locations in mind, but this is very much about the Midlands because co-living is so yield driven," he said. "You just can’t get a great yield in London, and in Birmingham I could do better with office development or high-end residential, but at Wolverhampton we are proving the business model and getting yields approaching 20% which is phenomenal, and very repeatable.
“I truly believe that co-living is where student accommodation was 20 years ago. There is institutional money going into new build student accommodation now. Young people and their parents are paying for it and they like it."
Co-living is now becoming established in London but has yet to make more than tentative progress in Birmingham or Manchester.
The UK's first purpose-built co-living scheme is due to see work on-site begin in May in Manchester. The development of 400 units at Echo Street is by IQ Student Accommodation.
A site at Hospital Street in the Birmingham's Gun Quarter is being mooted by local developer Volume.Property for a 180-bed scheme, Birmingham Live reports.
The £16M scheme will include a mix of shared and self-contained apartments. The planning application will be submitted in the spring.
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