London’s co-living accommodation expected to see huge expansion

Computer generated image of The James Chiswick, the co-living development proposed for Chiswick Roundabout

Investors wake up to the potential of co-living developments for making money

Co-living accommodation in London is expected to expand hugely in the next few years as investors see its potential for making money.

A report by law firm Macfarlanes, which describes itself as a leading adviser to private capital, suggests almost half of institutional investors are planning allocations to the sector by 2028.

Several developers have plans to build co-living accommodation in Chiswick.

One has already been given the go-ahead by LB Hounslow’s Planning Committee to convert Chiswick Tower from its current office purpose as office space into co-living units.

The development at Gunnersbury Station will create 394 ‘co-living studios’ designed for single people: private rooms fitted with an en-suite bathroom, double bed, small kitchen, table and chairs and a wall-mounted television, and shared living spaces including communal dining spaces, a screening room, communal kitchen, games room, library, laundry and gym.

READ ALSO: Chiswick Tower Co-living conversion gets the go-ahead

Another is still in the pre-planning application stage. The James, who specialise in co-living developments, is planning around 500 co-living rooms and associated shared amenities at Chiswick Roundabout, alongside 60 family homes and retail units, next to another new development, the London Motorsport Campus, which received initial planning permission in 2023 and revised permission in March.

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‘Co-living is attracting increasing attention from institutional and private capital’, say Macfarlanes. ‘Co-living has evolved from fringe concept to an increasingly recognised component of the UK living sector’.

The James Chiswick ground level from Larch Drive

An attractive option for renters, developers and investors

Co-living is proving popular with renters. Estate agents Frank Knight says it has broad demographic appeal:

‘The typical co-living resident is aged between 26 and 40, valuing flexibility, social interaction, and convenience’.

Savills says:

‘Cities with high graduate retention, like London, Manchester and Birmingham, are key markets for Co-Living. London alone attracts 158,000 graduates yearly’.

Finding affordable residential accommodation is increasingly difficult, so co-living schemes are attractive. The decline in home ownership has had a big effect on the levels of wealth inequality within and between generations and the well-being of young people entering the job market.

Computer Generated Image of Chiswick Tower, beside Gunnersbury Station

The attraction for developers, say Macfarlanes, is that:

‘Co-living can unlock constrained urban sites particularly in London and other major cities such as Manchester, Birmingham and Liverpool where housing demand remains strong and supply limited’.

By ‘constrained urban sites’ presumably they mean areas which are already densely populated, where new developments are likely to be opposed by local residents because of the impact on the local community in terms of the strain on the infrastructure, the availability of sufficient public transport, services and amenities.

Research by estate agents Savills suggests the potential target market for co-living is more than a hundred times that met by current availability: at least 640,000 people, compared with approximately 6,200 operational co-living units currently in the market.

‘This imbalance demonstrates the scale of opportunity for developers and both UK and international investors’, says Macfarlanes.

They note that while rising construction costs and regulatory complexity are placing increasing pressure on the viability of urban residential schemes, co-living developments can offer investors more bang for their buck, or as they put it: ‘can offer an alternative delivery approach by enabling greater residential density and a different income profile’.

Is their enthusiasm matched by that of the local council and the residents it represents?

The West Chiswick and Gunnersbury Residents Association keeps a close eye on developers’ consultations over proposed schemes for the western end of Chiswick. Their chair Marie Rabouhans has spent many hours over many years poring over plans and attending meetings, speaking at public inquiries and consultations about the various iterations of proposals there have been for the sites at Chiswick Roundabout.

The residents association did not object to the repurposing of Chiswick Tower, she told me. They saw it as a special case, which might enable improvements to Gunnersbury Station which are desperately needed.

The developer, Reichmann Properties, has agreed to set aside the land needed to install a lift and a new staircase to provide step-free access and to relieve overcrowding. They have paid for a feasibility study and agreed to keep the land available for the station upgrade for 25 years, providing Transport for London and Network Rail complete the design for the station within 13 years.

Chiswick Roundabout is a different matter and Marie questions whether we need another 500 co-living units on top of the almost 400 there will already be at Chiswick Tower.

“Personally, I woulld not be n favour of a co-living development at Chiswick Roundabout”, she told The Chiswick Calendar.

“It’s glorified student living accommodation for a short term, transient population. We would not be getting an established community, and as far as I can see, it’s against the Local Plan for the area”.

Hounslow Council’s policy on co-living developments is that they should only be permitted in exceptional circumstances. Their main housing need is to provide accommodation for families.

Hounslow’s Local Plan is currently being reviewed by external auditors – a public examination process local authorities have to go through – but unless their policy is changed as a result of that process Hounslow’s policy will remain that co-living units are not what is required to meet this area’s housing needs.

The precise wording of the housing needs assessment is that, based on their demographic modelling:

‘We anticipate little role for Large-scale Purpose-built Shared Living in Hounslow’.

“It has it’s place”, Deputy Leader and Cabinet Member for Regeneration and Economic Development Tom Bruce told me. “But it’s probably better in central London.

“I went to see a co-living development in Earlsfield out of interest, and it looked lovely, but my question was whether this was somewhere people actually wanted to live, or was it somewhere they were forced to live because there was nowhere else”.

“We need family homes and there are enough single person homes already coming through”.

Marie added:

“The area around Brentford stadium has already been swamped with flats, a lot of which are still empty, and the co-living options don’t offer any affordable accommodation”, though she noted she had yet to see the detail of what The James is proposing.