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Coliving – a Millennial utopia or another sharing economy cash grab?

coliving friends playing game

FEATURE: Coliving has made its way to Australia and is selling the promise of community, flexibility and convenience to Millennials at a time when loneliness is on the rise and housing is unaffordable.

This relatively new property sector falls under the banner of collaborative housing, where people share living space to get more mileage out of a single patch of land.

But unlike some of the more traditional ways of pooling resources, such as sharehousing and housing cooperatives, there’s more often than not a venture capital-backed corporation taking home a tidy profit. These places can indeed be fun, social places to live but could the benefits peddled in the brochure be a bit overblown? The Fifth Estate investigates.


There are now a couple of for-profit coliving operators in Australia, with UKO the first to enter the market in 2018 in the inner city Sydney suburb of Stanmore. Singapore-based Hmlet also opened coliving properties in Sydney this year.

Coliving is a type of collaborative housing that can be a great way of meeting people and saving money. And, because people tend to share facilities such as laundries and car spots, it can be a less resource-intensive way to live.

There’s all types of collaborative housing models and coliving is definitely on the luxury end, at least the for-profit version making a splash in Australia at the moment.

It’s based on the principle that you give up some private space in exchange for generous communal spaces and facilities, sometimes luxury ones such as pools and yoga studios, as well as social activities such as quiz nights and networking events.

Room prices are generally all inclusive and cover furnishings, cleaning, bills and other services. The idea is that the cost and administrative hassles of share housing, such as buying furniture and paying bills, is replaced with a single membership fee.

It’s not necessarily cheaper than more established housing options in the same areas, although its meant to be comparable once the cost of furnishings and bills are taken into account. A room in UKO Stanmore, for example, is $500-plus a week, depending on the size of the room and facilities such as ensuites and balconies.

The target market for this initial crop of coliving operators is the “digital nomad”– wealthy young professionals who can work from anywhere in the world. These people are attracted to the idea of flexible leases, serviced rooms and shared amenities that help them meet people, and most importantly, network.

University of Sydney Business School researcher Tim Mahlberg says there is a strong relationship with coliving and its predecessor, coworking, at least in its current form that’s reminiscent of other “sharing economy” ventures, such as Uber and Airbnb.

In the US, some of the best known coliving operators on the market are spinoffs of coworking companies such as WeWork. WeLive, established in 2016, bills itself as “a convenient, comfortable, and connected space with everything you need to live, work and play.”

Other major global coliving outfits such as Roam are also clearly going after the creative transient type, offering a network of coliving spaces around the world so members can land in a new destination every week.

These companies are pitching an escape from the daily grind into an exciting nomadic lifestyle that allows you to live and work anywhere you want, hopping from one coliving site to the next. And surrounded by other like-minded, driven entrepreneurs, it’s an ideal way to network and incubate business ideas.

But Mahlberg says targeting high income transient professionals can come at a price. The danger is that these places become exclusively for the young, mobile and wealthy, and fail to integrate with the community in any meaningful way.

Mahlberg thinks it’s particularly problematic to have colivers alighting in developing countries, enjoying the nice weather and the cheap cost of living, then fliting off again without any substantial benefits flowing to the local community.

He sees coliving in its current form as a community “sugar hit” for lonely young people. But both coliving and coworking would be more beneficial if there was a bigger investment and commitment in the places in which these facilities reside.

Narrative is the key to creating a collective identity where people are “village members” rather than focusing on the individual and what they can get out of the experience. Longer stays also play a role.

He believes in the right context these places could actually help rejuvenate a struggling local economy, such as in regional Australia.

Solving the problem of housing affordability or leveraging it for profit?

Tenants’ Union of NSW senior policy officer Leo Patterson Ross says that coliving is a “totally valid” housing option if that’s what people want.

“But I don’t think that’s where the market has come from. I think it’s gentrified shared housing, which was already a response to unaffordable housing,” he says.

“Our concern is it isn’t really solving a problem but leveraging a problem to make money.”

Ross says there is “not really a clear reason” for people to rescind private space, except that it’s expensive.

There’s value in social events but at the prices he’s seeing these rooms go for, he suspects you’d have to go to all of them to get value-for-money – never mind if life drawing isn’t your thing.

He wonders if people would prefer to live in a regular sized one- or two- bedroom apartment and have some events run at a pub down the street, if that were an option.

The biggest concern for Ross is that the coliving trend allows developers to build “really small places”.

“That’s our concern, that it’s going down a path of decreasing size and calling it affordability.”

How small is too small for a room or dwelling has been subject of debate for some time. And although the tiny house movement has shown that design goes a long way when it comes to maximising space, there’s no joy in cramped living quarters.

What the rules say

Coliving in NSW tends to fall under the new generation boarding house scheme, which aims to ensure residents have adequate protections and living standards.

Leases are more flexible than other housing options, with minimum stays usually one to three month. People can stay as long as they want, but will need to give a bit of notice before they leave.

In some places potential members are vetted to check that they will be a good fit, which helps avoids conflict and issues down the line.

There tends to be an onsite manager to call on for operational matters and emergencies.

The meaning of sharing

Ross suspects that young people searching for community are really after something more cooperative. With cooperative housing models, it’s back to the roots of the sharing economy before it was taken over by the likes of multinational companies such as Uber and Airbnb that divert profits into the global economy.

In genuine cooperative housing people are empowered to live more affordably and have an active role in shaping their local economy and community.

There’s more agency in the way the dwelling is run and the price that rents are set, and people can escape the landlord-tenant dynamic.

“They get away from a market driven relationship, which is part of the problem here.

“It’s no longer sharehousing, it’s no longer a group coming together.”

The growth in cooperatives is also a response to affordability issues, but he says removing yourself from the market altogether is a more “empowering” response.

Environa principal architect Tone Wheeler has been involved in a number of cooperative housing developments over the years, including student accommodation. One of the best examples that he’s designed is STUCCO in Newtown, a democratically managed housing cooperative run by students.

There’s no external management system and students have complete control over how the building is run.

Coming in at around $100 a week, the rents are “remarkably lower” than some of the commercial student accommodation operators. They’ve also recently installed a PV array and are heading towards carbon neutral. 

Designing shared housing that works

Wheeler says there’s three things to get right to make cooperative living a sustainable housing option. One is ensuring that it’s bringing down the cost of land in a fair and equitable manner.

The second is common activities. Cooking and growing food are the big ones.

The third is using the power of the collective to have more than is possible in a private dwelling, such as shared tools, a work shed, better laundering facilities, and shared bikes and cars.

Wheeler also says it’s important not to have too many rooms in each shared housing unit. Less than six ensures that people feel they belong to a household, and is loosely the number that one fridge can service before it’s hard to pin down “who’s responsible for rotting food”.

With student housing, he says it should be modelled around the idea of students having three identities.

The first is their own individual space, which should be high quality and bigger the average bedroom because it’s usually their “entire world”. A long skinny room works better than a square one so that it can be split into segments for sleeping, studying and storage.

Students should then feel part of a household, which means keeping the number of beds per unit down to about five or six beds.

Finally, if the housing is part of a larger cooperative site, they should feel like they play a role in onsite projects and general upkeep, such as watering the vegetable gardens.

Getting the regulation right early

Although the coliving leaders in the market are providing a pretty robust service, some are concerned about what comes next.

New players could disrupt the market with cheaper rooms that are even smaller than the current crop. Another problem is that the level of service could erode over time because economics will drive decision making.

Under tighter cash flow, security guards might be laid off or fire safety neglected.

Although pitching this model to digital nomads might be relatively harmless, the concern is what might happen if it moves onto more vulnerable demographics.

It’s a broader affordability issue and coliving is just a blip on the radar

Leo Patterson Ross from the Tenants’ Union of NSW says coliving is at the premium end of a problem born out of government inaction on housing affordability, and that the exact same issues are happening for much lower income bands.

It doesn’t help that there’s a lack of literacy in government about the newer types of housing regulation beyond owner occupier and tenancies. And anything that’s wrapped up in “startup culture” and “’innovation” has been shown to be “a bit distracting”.

The potential problems of coliving are flying under the radar at the moment but he suspects it will be a “lower tier issue”, and that regulators already have enough to fix around residential tenancies and housing affordability.

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Comments

3 Responses to “Coliving – a Millennial utopia or another sharing economy cash grab?”

  • Scott Harper says:

    Acronyms are useful if you know what they stand for, please explain what is IMHO and AHI about?

  • Yes, the clear distinction here is between the Stucco example, which has no external management, with examples in which corporations deliver and manage, while residents are just consumers. This is not a problem for governments and corporations to resolve. Corps will continue to give us what works for them until people step up and take responsibility for creating a better model, then participating in the design and ongoing management.

  • Nicholas Loder says:

    Co-ops. European model would be wonderful to see here in Oz, but…wrinkling out land on a land rent model is the key IMHO
    And if I could make a plug for an AHI Seminar in Sydney 22 October exploring this I would 🙂

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