Fredéric, you have worked with serviced real estate assets for quite some time; can you share with us your perspectives on the evolution of these types of assets and how coliving fits in?

As CEO of PRS at Nexity, I have observed that the sector has been in a transition phase that redefines the essence of residential real estate products. Essentially our market has gone from a real estate - as a physical asset - product focus to more and more of a customer experience focus; a focus shift from hardware to software and from products to services.

The increasing impact digital technologies have on the real estate sector: with more focus on UX and with the integrations of digital products and know-how into real estate assets, developers and operators can streamline processes and have stronger interactions and engagements with end users.

Importance of ESG approaches in real estate: ESG is a business priority throughout any sector, and Nexity develops and operates residential real estate assets in compliance with cutting edge ESG standards.

• At Nexity we rethink how to develop, build and operate what we call ‘serviced residences’ in order to ensure added value for both users and investors. We have made this shift in response to two main trends:
• The real estate sector is transitioning from a product- oriented to a service-oriented market, and partnerships between different ecosystem stakeholders (local authorities, investors, operators, developers, etc.) are essential for enabling product development and ensuring market growth.

The real estate sector is transitioning from a product- oriented to a service-oriented market, and partnerships between different ecosystem stakeholders (local authorities, investors, operators, developers, etc.) are essential for enabling product development and ensuring market growth.

Marie-Suzanne, you have also worked in the alternative residential and hybrid hospitality sectors over the years, what have you learned from these kinds of models in terms of what works and what doesn’t?

The alternative residential and hospitality sectors have traditionally gone with a strict “location, location, location” approach. Although location will always remain a key investment criteria, another key aspect is being prioritised nowadays - the customer - forcing developers and operators to take more of a “location, location, customer” approach. The challenge in both these sectors is to understand our customer base and engage with them in order to provide the added value these users really need and want.

This is true whether you are launching a new real estate venture or rebranding an existing one. That said, a successful model these days must take into consideration these client needs, ensure your market segmentation is sharp and unique and target the appropriate clients for the appropriate products.

These models are evolving into what is now characterised as “lifestyle real estate” - models that strengthen their value proposition in regards to customer experience, while optimising their real estate products by investing precisely where clients identify value (e.g. common spaces, staff, services). A key to these “lifestyle models” is ensuring strong customer experience, and building trust and vision with all of your stakeholders (customers, investors, developers, operators, etc.).

In the coliving sector we have seen this with products that integrate flexibility into their services, offering different room typologies (e.g. cluster apartments, studios, units for young families, etc.), affordable price points and an abundance of cultural and events programming. In hospitality we also see high quality experience and service layers with brands such as Mama Shelter, CitizenM, Hoxton Hotels, OKKO Hotels and many more.

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Based on the trends and learnings you both just shared, what can the coliving sector do to ensure it reaches the maturity and scalability we all want it to reach? What is coliving’s current USP?

Shared living is an old solution to current challenges, and we are now just calling it coliving. It is an adapted version of shared and communal living that responds to 21st century demographic needs and global shifts. The basic core of the coliving model is really just a place to eat, live, work, share connections and hopefully achieve the right balance of wellbeing, productivity and socialisation. If we see it from more of an economic and structural perspective, coliving is the digital transformation of traditional residential assets.

By implementing strong user journey flows - from discovery of a coliving brand to the moment residents sign their lease all the way through to their last day - coliving operators use real-time data and metrics to enhance their operations and overall customer experience. This tech-savviness is a big selling point for the coliving sector and is positioning these assets strongly compared to other traditional residential and hospitality assets. That said, the coliving sector still has a few things to learn, including the following:

1. Understanding optimal operating and investment models: coliving operators are still figuring out whether to use a management contract model or leasing more of an asset-heavy approach. The question here is which model will bring the most value back to investors while maintaining a high level of customer experience.
2. Demonstrating how fit the product really is: coliving brands need to evaluate demand closely to ensure they are translating user needs into an appropriate real estate product and market fit.
3. Investment readiness: coliving operators will be building lifestyle residential offers, with a non standardised product, in order to ensure market-fit and will need to ensure readiness for institutional investors. In order to be truly investor- friendly, many coliving operators still need to evolve and clarify their value proposition and contractualisation model.

Real estate can be a slow sector and we have seen that the coliving sector has taken a bit more time to institutionalise compared to other “service- based” real estate companies. That said, once the fundamentals of the coliving sector are put into place, this institutionalisation will happen quite rapidly, and we have seen it the last six months: we have seen that the pandemic has only accelerated these trends and supported the institutionalisation of the coliving sector due to spiked investor interest in the residential investment market, as it’s often a resilient real estate asset class during a crisis.

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In which ways are you two - and Nexity - supporting this market consolidation? What are some of the projects you are working on and how are they helping the coliving sector evolve?

Our jobs consist of delivering serviced residences and shared living projects and supporting operators, developers, investors and local authorities in making relevant decisions when it comes to financing and planning alternative real estate assets. Through our ‘Nexity Résidences Gérées’ platform, we do this by implementing the three following strategies to scale up:

• Knowledge exchange: providing education and awareness opportunities for internal and external stakeholders (local authorities, investors, operators, developers, architects, etc.) by offering trainings, webinars and consulting services.
• Organisational transformation: helping real estate companies adapt their marketing, development, investment, and operations strategies to ensure the sustainable delivery of their projects.
• Process standardisation: we help investors, developers and operators align on building standards and development processes at a European-wide level.

By doing this, we try to influence the real estate sector to prioritise various stakeholder needs, such as: (1) customer needs, by defining standards for the room size, event guidelines and operational best practices; (2) investor needs, by developing CSR strategies and outlining investor criteria; and (3) the needs of planning authorities, by helping them identify impact- and profit-driven operators and project teams. The challenge here is always making sure the stakeholders are fully aligned on all of their needs and interests!

In regards to our current projects, we work on various residential real estate verticals and shared living developments, including senior living (in partnership with Domitys), student and young professional living (with our in-house brand Studea) and more ‘traditional’ coliving for professionals (with Urban Campus).

We find that the operational model of these shared living / serviced residence models are quite similar, and often have a digital platform to enable a streamlined resident journey, innovative spatial design and operational capacities as well as strong customer service and cultural programming.

What we have observed along the way is that investors are always willing to diversify their assets, and the residential real estate sector often provides reliable returns on the long-term. Not only that, but investors are looking more and more into coliving because they have seen the track-records of the student accomodation and senior living sectors and they view coliving as providing a similar offer to a more diversified audience.

What’s more is that the pandemic has revealed that social connection is not a nice-to-have but a fundamental human need and that there is huge value in a well-designed, high-quality accommodation option like coliving. Coliving brands now need to double down on these realities and ensure that their spaces include a combination of comfort, flexibility, sustainability (e.g. natural outdoor spaces and eco friendly construction materials) and noise-free spaces - among many other aspects - to really go above and beyond what has been developed to date.

With a huge potential for office and hotel conversion into coliving, the shared living sector needs to ensure it is taking into consideration an appropriate blend of social, environmental and financial aspects throughout their strategies and spaces to create products that fit the needs of all their stakeholders - residents, investors and planning authorities alike.

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