A Berlin-based co-living service provider has joined forces with one of Europe’s largest real estate investment managers to assemble a €1 billion co-living portfolio.
Medici Living Group, the largest provider of co-living services in Europe, and Frankfurt-listed Corestate Capital Holding have agreed to a Europe-wide collaboration, the aim of which is to invest €1 billion of equity and debt in the co-living sector over the next three to five years.
The cooperation – which will see the two parties work together on acquisitions, conception and management of the properties – marks the largest investment into the evolving co-living asset class worldwide to date.
“This investment is the breakthrough for co-living in Europe,” Gunther Schmidt, founder and chief executive of Medici Living, said.
He believes that the new asset class has even more potential than the already prosperous co-working sector.
“The residential market is significantly larger than that for office assets. We want to become the WeWork of co-living,” he added.
WeWork, comfortably the dominant player in the global co-working office market, is – according to US business portal Small Business Labs – forecast to grow from approximately 15,000 co-working spaces in 2017 to 3.8 million by 2020 and 5.1 million by 2022.
Medici Living currently targets the property markets of Germany, Netherlands and the UK, but the new investment programme will also see it target Austria, Switzerland, Spain and Poland.
Cities with over 500,000 inhabitants and properties will be the focus – with both existing and new-build properties under consideration. The investment volume is expected to be between €20 million and €60 million.
The programme is anticipated to include around 35 assets in total, which the group will operate under the ‘Quarters’ brand. The brand aims to target young professionals with ‘high-quality facilities’ and a residential and living experience which aligns ‘with the needs of the digital natives of Generation Y’.
Corestate will be responsible for investment, project development, financing, asset and fund management, while Medici Living Group will cover conceptual design and operation of the properties. The latest venture will add an extra 6,000 rooms to its current portfolio of 1,800 rooms.
“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,” Dr Michael Bütter, chief executive of Corestate, commented.
“Investment in the co-living segment is characterised by the low risk profile of residential property paired, however, with higher yield expectations. Investors will profit from Corestate’s Europe-wide expertise in deal sourcing and the operative know-how of Medici Living.”