The Growing Importance of Co-Living and Micro-Apartments in Addressing Urban Housing Shortages

The concept of co-living has gained considerable traction in recent years, especially as urban centers grapple with issues of accessibility to affordable housing and a widespread housing shortage. This is particularly evident in Switzerland, where cities like Zurich, Zug, Winterthur, Basel, Bern, Lausanne, and Geneva face significant challenges in making urban living both accessible and affordable.

The world’s combined real estate is estimated to be worth just under $300 trillion, with nearly 80% of that value accounted for by residential developments. This underscores the critical role that our homes play, not just as a fundamental human necessity but also as the most significant asset class and store of value globally.

Given this importance, it is not surprising that new housing products, which respond to our changing lifestyles and aim to alleviate the pressures of insufficient housing stocks, are attracting considerable attention. Co-Living has emerged as an innovative approach to providing high-quality rental accommodation in accessible locations. Since 2020, investors have poured nearly £1 billion into funding or acquiring co-living developments in the UK alone. These schemes offer residents flexible housing, social interaction, and high-quality accommodations at more affordable rates, all within accessible and central locations close to work and lifestyle amenities.

Co-Living models typically focus on creating denser residential environments with shared amenities in a curated setting. The business models for these developments are generally centered around offering a lifestyle-driven experience that resonates with modern consumers. This approach aligns with several universal consumer dynamics, such as the demand for sophistication, authenticity, convenience, and flexibility.

In parallel to the rise of co-living, micro-apartments have also gained prominence as a response to the housing shortage. Micro-apartments are a product of these developments and the resulting market trends. Positioned in a niche market between hotel-like offerings and traditional rental apartments, they cater primarily to young professionals and those seeking a flexible, ready-to-move-in temporary housing solution. By making efficient use of limited living space, micro-apartments fulfill all the functions of a classic apartment. They are usually offered fully furnished under various operator models in central locations.

In Switzerland, the market share of micro-apartments has steadily increased over the past few years. They command significantly higher rental prices per square meter than conventional apartments, reflecting the willingness of target groups to trade living space for a central location and to accept higher rents in exchange for immediate availability and flexibility. Given that these trends are expected to continue, providers in this segment see sustainable potential and are expanding their market share, especially in urban areas where no relief in the housing market is in sight.

As urbanization continues to challenge the availability of affordable housing, both co-living and micro-apartments present viable solutions for the future. These innovative housing models not only address the immediate needs of modern urban dwellers but also reflect broader shifts in consumer behavior and lifestyle preferences.

At bavivi, we are committed to exploring and developing housing solutions that meet the evolving needs of today’s urban residents. If you’re interested in learning more about how co-living and micro-apartments can make urban living more accessible and affordable, or if you’re looking to invest in this growing sector, we invite you to contact us.