Berlin-based co-living company Medici Living has raised €1B to undertake the largest investment in the nascent sector anywhere in the world so far.

Medici has teamed up with Frankfurt-listed investment manager Corestate Capital to deploy €1B of equity and debt over the next three to five years to buy and develop 35 co-living facilities comprising up to 6,000 units across Europe. The facilities will be operated under Medici’s Quarters brand.

In addition to Medici’s current European target markets of Germany, the U.K. and the Netherlands, the new investment program will focus on Austria, Switzerland, Spain and Poland. The focus will be on cities with populations greater than 500,000, and properties — existing as well as new-build — with an investment volume of between €20M and €60M.

Quarters already has one location in Berlin, two locations in New York and one in Chicago. It targets young professionals and looks to offer a  living experience aligned with the needs of millennials and Generation Z. It is also looking to expand in the U.S. in 2019.

“This investment is a breakthrough for the co-living sector worldwide,” Medici Living founder and Chief Executive Gunther Schmidt said. “The co-living sector has enormous potential — even greater than the coworking sector, and our European investment program presents a playbook for our growth plans in the U.S. and other markets. We fully intend to be the WeWork of co-living.”

Corestate will handle investment, project development, financing, and asset and fund management, while Medici will be responsible for the conceptual design and operation of the properties. Medici will grow its current portfolio of 1,800 rooms, which it said is the largest co-living portfolio in the world, to more than 7,800 rooms with the program.
 
“Urbanisation, young people’s desire for community as well as the opportunity to live and work in different cities, are boosting demand for communal residential space,” Corestate Chief Executive Michael Bütter said. “Investment in the co-living segment is characterised by the low risk profile of residential property paired, however, with higher yield expectations.”

Co-living was recently deemed the sector with the best prospect for growth in Europe in 2019 by the ULI and PwC’s Emerging Trends in Real Estate Europe 2019 report.