The Class of 2020 was founded in 2011 as a think tank to solve the student housing crisis. In the aftermath of the financial meltdown, we believed we needed ten years to solve it. Our think tank was initiated by a small group of Dutch student housing pioneers in search of new housing typologies and investment models to support budding internationalisation strategies in European higher education.

In the years that followed, the sector experienced unprecedented growth. Universities across Europe stepped up investment in internationalisation and the student learning experience. Visionary investors, developers and operators introduced new flexible and community-oriented living concepts to markets across Europe. Billions of equity and institutional funds were deployed on campus, in housing projects and regenerated districts. The success of the PBSA asset class spurred interest in blending with coliving and hybrid models, given the similar demographics fuelling demand and the standard of living anticipated by young talent graduating from PBSA. Along the way, The Class brought together visionaries from real estate, higher education and local city leadership communities for conversation and agenda-setting in what was a necessarily collaborative activity.

By the time our whole community last gathered in- person - at our November 2019 Conference - the industry had committed EUR25 billion to ‘blended living’ globally in the next five years. According to The Class of 2020’s research, just under half of this - or EUR12 billion - was targeted for investment in PBSA, over EUR4 billion in coliving accommodation and a further EUR9 billion in hybrid models. Blended living was recognised as a rapidly expanding investment opportunity and a possible solution in urban living for young people traditionally shut out of home ownership and rental markets by skyrocketing prices and rents. Cities increasingly had eyes on blended living solutions to address growing housing crises and as a way to attract and retain talent. New models also provide an alternative way for investors to diversify and expand their residential portfolios. Institutional investors began to take the sector seriously, seeking long-term stability and rental growth. According to The Class of 2020’s count, by February 2020, at least 40 of IPE’s Top100 institutional investors (by volume) were investing in PBSA, coliving, hybrid models or some combination, fuelling growing global housing platforms.

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The Next Ten Years

Everything changed in March. The crisis in global health and student mobility was so profound that it called into question the very future of cities and universities. Students retreated from campuses.
The cracks in higher education models began to show and cities like Amsterdam saw populations decline for the first time in years. Many of us barely had time to adjust, let alone look ahead. So in November 2020, The Class brought together over 900 delegates in a virtual festival to ask what needed to be done to make a better future happen faster for university cities.

It was clear our conference found the community on the cusp of huge transformations in living, working and learning, many of which have been long in the making but accelerated by the current crisis. Real estate players are now more than ever pushed by social and technological advancement to think beyond traditional asset classes once divided by core functionality, to re-imagine the value and purpose that space can offer to customers and investors alike. Keynote speaker and bestselling author of Rethinking Real Estate: A Roadmap to Technology’s Impact on the World’s Largest Asset Class, Dror Poleg, encouraged our community to re-think value and find purpose in a landscape of abundance by tapping into things of which there is scarcity. He shared with us the following wisdom: “In a world of abundance, the best way to create value is to tap into new scarcity, into things that are becoming more precious in this world.” According to Dror, human connection, privacy, truth, meaning, nature, agency and education itself are among the scarce resources real estate players can tap into with forward-thinking propositions.

As purpose grows in importance, coliving brands are particularly well-placed to build and articulate novel propositions. Quarters CEO and CMO Esther Bahne highlighted the unique opportunity for shared living brands to find their solutions for residents and communities, pointing out the following: “We have you for an average of nine months. You live with us. You arrive with a suitcase. There is something fundamentally changing in your life when you arrive somewhere with a suitcase and no furniture.” According to Esther, understanding this moment helps her understand what Quarters needs to do for young talent arriving in new cities. She said: “We have you at a moment where everything is changing, you are wanting to meet new people and you’re hungry for connection and wanting to belong.” Esther, whose brand raised USD300 million in 2019 to fuel its expansion across 15 cities in the US and Europe, emphasised that community is at the heart of their proposition. Initiatives such as partnering with local businesses to provide subscriptions to services, organising shared experiences and even facilitating access to time in nature are among their solutions.

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The opportunity to scale visions into global solutions comes at a time when institutional players are dramatically shifting how they make investment decisions. Hans Op ‘t Veld, Head of Responsible Investment at Dutch pension investor PGGM Investment, is at the helm of over EUR250 billion, making decisions on EUR30-40 billion annually. The increasing risk climate change poses to real estate assets comes to the fore alongside rising demands for transparency and accountability made by new generations of more conscious end customers and even pension holders themselves. Hans and other top pension investors worldwide are devising ambitious strategies for shifting titanic funds towards investments that help achieve the UN Sustainable Development Goals.

According to Hans, “A lot of institutional investors need to reinvent themselves. We are no longer in an economy where ownership is everything. Now access is much more important.” Hans went on to say that this changes the way investors operate - “The assessment of your unique selling point goes well beyond the provision of capital. This requires different expertise levels because it means that you have to look beyond location.” As for the types of living concepts Hans thinks institutional players can scale, he shared that: “We need to find the right collaboration with parties who can help us find the balance between the provision of capital and the operational activity, which is something we don’t typically understand. This is a massive change and makes for an interesting period of time of learning.”

Trends Shaping The Next Ten Years Of Blended Living

• Community Technology: Technology will redefine basic assumptions about location, visibility, zoning, capital and information in real estate. Digital innovation will allow brands to understand and design consumer- focused solutions to living needs.
• Sustainability Accelerated: Critical young consumers and increasingly strict sustainable investment criteria will mean that successful real estate players will be pushed to create low-carbon and socially sustainable urban living solutions.
• Purpose-Driven Brands: The ability to articulate values and purpose will be a key differentiator for real estate operators and asset managers to co-create portfolios with institutional investors and increase public and private partnerships.
• Good-Life Communities: Hybridisation that provides wellbeing solutions in the urban context will continue as both customers and institutional investors see the long-term value blended experiences deliver in terms of society and investment returns.
• Ultra-Flexibility: Customer-focused flexibility in lease length and spatial use will remain a key value proposition to respond to a fast-changing environment.

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Fast-forwarding Our Future

Our conference found a community poised to unite personal and professional ambitions to make a better future happen faster. The magnitude of the moment prompted reflection, not only on emerging typologies and investment strategies, but on the philosophies and organisational cultures driving our growth. Drawing on the findings of the day, we delivered a mandate for the next ten years of The Class of 2020:

• Diversify Diversity: Future generations need a diversity of choice in opportunity and living. Industry and economies need a diversity of experience and perspectives.

• Impact at the Center: Creating a positive impact is crucial. The wider social and sustainability goals must drive new business plans.

• Embrace Complexity: Our role is not to simplify complexity but to translate complexity into well- informed choices for future generations to make.

• Focus on Equality: Democratisation of technology, flexibility and accessibility should address fairness and equality to education and growth opportunities.

• Re-think Blended Living: Every component of our daily lives is increasingly happening in and around where we live. Life itself will become a school
of continuous learning with human interactions enabled by blends. This requires a blended approach to spaces and neighbourhoods.

• Empower our People: If we want to serve the future generation, we need to empower our people, the future of the industry. We need to keep pace with new skill sets and competencies.

• Collaborate & Learn: The only way to address a shared responsibility is via collaboration and learning across industries.

The blended living community is made up of a one-of- a-kind combination of visionary thinkers, passionate advocates, seasoned practitioners and experts of all stripes. When brought together in innovative partnerships, we have huge potential to deliver solutions at scale.

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