The COLIVING phenomenon

Adapt or die. That is what the pandemic has taught us. Indeed, it continues to teach us. There is no doubt that the pandemic has changed our way of life, and not only from a personal perspective, but also economically and occupationally.

Focusing our attention on tourism, it is worth noting that luxury accommodation continues to grow, while the growing demand for lower-end accommodation is being neglected. The appetite for upgrading is palpable in the Balearics, the luxury sector is growing stronger with the support of investors. However, the pandemic has also shown that more and more tourists are looking for cheap accommodation, while regulatory siege is stifling holiday rentals. Young people want hostels, there is a whole niche to exploit.

The demand from young people in the lower segment is growing a lot and their interest is in holiday and urban hostels. This is another effect of the pandemic. Meanwhile, the siege against tourist rental accommodation is growing. Turning to low-end accommodation, it is also growing in Europe, with France and the Netherlands already seizing the opportunity.

The recovery of the tourism sector in the summer of 2021 was half-hearted due to the restrictions that countries still maintained to contain the pandemic. However, these limitations did not prevent Airbnb from closing a record third quarter with a 36% increase in sales compared to the same period in 2019. For Nate Blecharczyk (Boston, USA, 1983), co-founder and Strategy Director of the digital accommodation platform, this increase is due to a change in the way people travel. "Tourism is making a strong comeback, but it's coming back in a different way". Blecharczyk links these new trends to the change in mindset regarding telework in the last year and a half. "63 % of workers expect their companies to allow them to hold some form of remote work." "During the last quarter, people have been switching from planes to cars to take trips closer to home and dispersing tourism outside of cities. "This is a family traveller who lives where he or she is moving to", and Blecharczyk also said that "with platforms like Zoom, one to three-day trips will tend to disappear and the focus is on team meetings for collaborative work for a week or for events and conferences". In fact, he indicated that "we have a project with Malaga and the Costa del Sol region to turn it into a long-stay destination for digital nomads".

In line with the above, it is worth talking about Coliving, the subject of this article.

What do we really mean by coliving?

Coliving is a new way of living that focuses on community. A hybrid between a traditional residential product (accommodation), a student residence (community) and a hotel (services). From an investment point of view, an asset built for coliving maximises the return €/m2 by optimising space. In this type of operational asset, it is more the business generated within the property than the traditional €/m2 of real estate that gives value to the property.

The concept comes from the United States and Asia and was introduced in Europe through the United Kingdom, Holland and Germany. In Spain it has been represented for many more years than it seems, but it was born dedicated to digital nomads and on the coast or on the islands. Right now, the product is turning to young professionals or corporates who see housing as a service, and an important added value to the community approach that these spaces have.

It responds to a need for temporary accommodation considered as medium stay (3-24 months) in which the renter prefers a "plug and play" space. In other words, it is activated and has all the services included in the rent.

From the user's point of view, more and more people are renting rather than buying. This trend in total percentage has remained at around 20% in Spain for many years, but among young people aged 20 to 40 it has risen to almost 40% in the last 10 years. This, evidently, responds to an inability to buy a home, but also to the global mega-trend of seeing housing as a service and not so much as an investment.

From an investment point of view, given the experience we already have in Spain, it has been demonstrated that with a good design this product offers high occupancy levels at affordable rates.

However, its legal framework is complex due to the combination of residential and tertiary uses. Coliving is a kind of "extended residential stay for professional or educational purposes", without a clear and defined concept in our legal system. This makes it necessary to analyse each project individually and resort to the regulations governing the typical contracts most closely related to this type of contract and, especially, because it is attractive, to the general regulations of the Civil Code on the rental contract (arts. and1.542 following of the Civil Code).

Thus, coliving is not a shared or room lease in itself, and is therefore far removed from concepts such as "lodging" or the temporary transfer of habitable space in exchange for a price; or the "right of habitation", a variant of the right of usufruct by which a person has the right or power to occupy in another person's house the necessary rooms for himself and his family members (art. 523a of529 the Civil Code).

On the other hand, it is not a rental subject to the Urban Rental Law either, since its purpose is not to satisfy the "permanent need for housing". If we are to find a similarity or closer figure, coliving is closer to the figures of "aparthotels" or student residences, although in the case of coliving the target audience tends to have a similar specific profile. There is also a certain similarity with tourist apartments, which are close to hotel regulations. However, these alternatives are different housing solutions.

From the urban planning point of view, certain doctrine brings coliving closer to hotel or tourist use. In this sense, regulations such as article 159/2003,7 of 10July, on the organisation of hotel establishments in the Community of Madrid, offer an open door to these forms of accommodation. The Catalan regulations have introduced two alternative types of ownership such as shared ownership or timeshare in order to facilitate the entry of new international residential models such as coworking or coliving.

New housing measures: regulation of Coliving and other novelties (Decree Law 50/2020, 9December)