Need for shared space now boon for co-living
LOS ANGELES: Co-living and build-to-rent operator UKO expects to more than double its portfolio to over 2500 rental units over the next two years after leasing up its newest building in inner Sydney in just four weeks, while generating a 20 per cent uplift in returns for investors post-COVID-19.
Near record low rental vacancy rates in Sydney – just 1.3 per cent according to SQM Research – has lifted occupancy across UKO’s portfolio of 18 buildings and more than 1000 apartments to 98 per cent and allowed it to bump up asking rents.
The group is fielding over 2000 inquiries for rental accommodation a month. Co-founder Rhys Williams says it cannot keep up with demand.
About 70 per cent of UKO’s portfolio comprises co-living studios, furnished apartments as small as 22 sq m. The remainder are larger, more traditional rental apartments.
UKO, part of serviced apartment and hotel group Veriu, operates these apartments under hotel-style management agreements on behalf of private developers, family offices and institutional investors.
Mr Williams said rental demand was so strong that its newest offering, a 69-unit co-living building in Alexandra developed by Sasco Developments, was 70 per cent pre-leased prior to being completed, and fully leased just a month after opening its doors.
“Demand is super strong at the moment,” Mr Williams said.
“Record low vacancy rates are playing into that demand, but so, too, is the desire of renters to live in managed communities where they connect with others,” Mr Williams said.
“It’s a new way of renting in Australia, and it’s an exciting story about how it is being embraced.”
Based in mostly inner suburban locations like Newtown, Paddington, Camperdown and Glebe, UKO’s coliving studios have weekly rents of between $490 and $650. Rent for BTR apartments is $700 to $1500.
Co-living apartments, an offshoot of the expanding build-to-rent sector, come (in the case of UKO’s offering) fully furnished with kitchenettes and ensuite bathrooms, but with some shared facilities such as laundries.
The weekly rent covers all utility bills as well as Wi-Fi access.
To foster a sense of community, UKO provides a calendar of social events at each of its buildings, including things like cheese and wine tastings and yoga classes.
“A wide cohort of renters have embraced the opportunity to adopt community living, much of which has been driven by the need for companionship,” Mr Williams said.
These new-age renters include a higher proportion of single females, as well as young professionals. The average length of stay is six months in UKO’s s co-living studios and 12 months in its larger BTR apartments.
The new Alexandria building offering 69 co-living studios and lofts and is Sasco Developments’ third collaboration with UKO.
A fourth Sasco project in Meadow-bank in Sydney’s north-west is expected to kick off construction mid-next year and will include 162 co-living studios and 133 BTR apartments plus a retail centre operated by UKO.
Said Joseph Sassine, a director at Sasco Developments: “Demand for coliving continues to outstrip supply.”
Mr William said UKO was opening a building a month and had plans to expand interstate.
Last year, UKO acquired a Marrickville building from competitor Singaporean operator Hmlet Australia, which collapsed in 2021.
The collapse of Hmlet opened the doors for another Asian co-living operator, Dash Living, to enter the Australian market. Dash took over Hmlet’s 82-room St Peters building and also has a site in Darling Harbour.
More widely, the burgeoning build-to-rent sector is attracting a plethora of new players to the space including Macquarie’s Local platform and Nuveen’s The Switch, which is a hybrid of student accommodation and coliving apartments.