Alternatives Outlook 2024 Report

CO LIVING

In 2023, the Australian co-living sector witnessed an increase in capital markets activity following several years of subdued activity. The most significant deal across Australia’s co-living sector in 2023 was PGIM’s investment into TRIBE Hotel’s Australian co-living strategy. This collaboration is set to establish a portfolio of co-living assets valued at up to AUD 750 million. Operators originating from the hospitality industry have been most successful in terms of co-living platform creation to date. These groups often have strong lifestyle and community branding expertise alongside familiarity with management intensive accommodation operations. On a global stage, the co-living model has proven to be well-suited for cities grappling with extreme

affordability challenges. Within the Australian context, this has predominately been Sydney. While developers have gravitated to Melbourne for BTR projects due to the increased availability of sites for scale rental product, Sydney has remained the key focus for co living activity with the operational model typically most suited to cities with strong transient corporate workforces and exceptionally high rental rates. Cushman & Wakefield predicts that while high quality and well managed co-living portfolios are well placed for outperformance, there is a more limited growth trajectory for sector expansion compared to other living sectors. Co-living offerings are likely to remain a sub-set of broader product offerings across key hospitality and living sector players which can provide broader platform operational efficiencies. Sector size estimate: AUD 5 billion Prime yields 4.50%-6.00%

Figure 7: CO-LIVING AND BTR SUPPLY BY STATE OPERATIONAL AND PIPELINE

KEY TRANSACTIONS

Size AUD

Buyer/ Investor

Type

Name

Yield

Date

0 20 40 60 80

Capital Raise

Tribe Co-Living

750m*

-

PGIM Sep-23

60

17

Vision Land (Private)

30

UKO Surry Hills

14

Direct

15.5m -

Nov-23

NSW Number of assets

VIC

Co Living BTR

*Total fund size

| AUSTRALIA ALTERNATIVES 16

CUSHMAN & WAKEFIELD