Co-living, or shared residences as Gen-Z and late millennials now refer to them, is not a recent idea.
According to co-living.com, the current co-living movement is interlaced with the booming sharing economy, which represents a societal shift away from materialism and in favor of a peer-to-peer bias.
People may now find what they need straight more easily than ever thanks to the development of the Internet.
The shared economy model is spreading thanks to platform companies like Uber, Udemy, Airbnb, BuyLetLive, WeWork, etc. These companies make it possible for individuals and groups to amass income from idle or underutilized assets like automobiles and extra rooms.
The modern co-living communities that are sprouting up all over the globe are an example of this revived cultural trend toward resource sharing.
Other factors like increased housing prices, diminishing environmental resources, social isolation in the digital age, and the millennial viewpoint of valuing experiences above all else are driving the growth of the co-living model across the world.
The impact of these factors differs across different countries and continents. For instance, the decision to opt for a shared space can be more socially driven in some places than in others. In Africa, the co-living model has grown phenomenally over the past decade. In the early days, analysts forecasted the adoption of co-living.
The current data shows a contrary view. It appears that several factors, mainly the need for better amenities and cost savings, are driving up the cost of co-living, making co-living more attractive to the younger generation.
This is evident in cities like Lagos, Johannesburg, Cairo, and most recently Nairobi, where average rents are higher. Beyond the economic reasons, there are other factors causing Gen Zs and late millennials to opt for co-living or shared spaces in the following paragraphs, we explore this subject in more detail, including an outlook on its impact on Lagos.
Affordability drove demand for shared spaces.
Co-living spaces are more affordable compared to solo leases because of economies of scale. The rent for a shared room (co-living space) is typically 20% cheaper than a stand-alone studio apartment and up to 35% cheaper than a 1 bedroom apartment.
In areas where studios and 1-bedroom apartments are renting for N1.1m and N1.5m, respectively, the price tag on shared rooms is usually within the N1m region or less, depending on finishing.
The fact that rents for shared spaces are cheaper has been a hook for most young people.
To make it even more attractive, operators are beginning to offer flexible payment options and, in most cases, adding amenities to their shared space offerings.
The average price of an apartment in Lagos
In many urban areas across Africa, housing costs have become unaffordable, especially for young people who are just starting their careers. Co-living offers a more affordable housing option compared to traditional rental or ownership arrangements, as residents share the cost of living expenses, including utilities and amenities.
More than any other factor, the singular factor – affordability has driven the adoption of co-living. Outside of affordability, co-living spaces offer flexibility, and this is especially important for digital nomads who travel across cities for short periods of time.
The flexible lease terms, allow young people to avoid long-term commitments. This flexibility is particularly attractive to those who may be uncertain about their future or who have transient lifestyles.
From what we have seen over the past few years, surging rental prices and the generally high cost of living are pushing young people to explore cheaper ways to rent apartments and share bills. The most popular option is shared apartments.
This trend is expected to continue and will have a significant influence on shaping the property market in key cities like Lagos. Here are some of the ways this will happen.
The increasing need to formalise the model will result in supply expansion.
Due to the rise in property prices and living expenses, renters in Lagos will continue to explore shared apartment options. Developers, landlords, and other players in the market will see the rising demand and look for ways to meet it.
In this respect, we expect to see the emergence of co-living-focused companies and startups, which will lead to increased investment in this sector. With more standardization, it becomes an attractive option for investors and residents.
Today, one of the most prominent co-living space providers is Haap Living, a proptech startup that provides access to a more affordable, social living arrangement for city dwellers by renting out spaces with private bedrooms and shared common spaces like the living area, kitchen, and laundry.
According to the company, residents can find roommates through their digital platform in a serviced, furnished, and Wi-Fi-active apartment all within 24 hours and with no hidden fees.
We expect to see more companies like Haap come into the space to provide socially driven accommodations to Lagos’ teeming young population in the future.
Some of the other changes will include the incorporation of eco-friendly practices, sustainable design, and green initiatives that will be more appealing to environmentally conscious individuals seeking to minimise their carbon footprint.
Increased technology Integration to streamline the rental process
Co-living operators leveraging technology to streamline the rental process, offer smart home features, and enhance residents’ experiences with online booking platforms, automated payments, and digital communication have made co-living more accessible and efficient.
This is very important, and we expect to see companies come into the space. Co-living operators improve resident experiences, streamline procedures, better manage resources, and ultimately run their businesses more successfully and efficiently by embracing technology.