An operator in the co-living rental niche in London has recorded an average 44 per cent annual growth over the past three years, notwithstanding the pandemic.
Built Asset Management says this growth incorporates the financial year of 2020-1, within which huge restrictions were placed on the sector as a result of the pandemic, meaning the company could not complete any new rental agreements for a substantial period of time thanks to lockdown.
BAM offers co-living properties to young professionals in the capital, with the average age of tenant being 28.2 years old.
Alex Gibbs, co-founder and director of BAM, says: “There’s no doubt that the past year has been incredibly difficult for many within the PRS, particularly within the co-living sub-sector, with estimations suggesting that over 30 per cent of London’s house share operator industry actually no longer exists.
“The fact that we’ve managed to defy this trend is undoubtedly a huge milestone for the company, indicative of the strong position in which we sailed into the pandemic, the implementation of some sound but contrarian strategy and the fantastic work of our incredible team.”
Going against advice, BAM says it took the decision to underwrite full returns to all landlords within its property portfolio throughout 2020-21, equating to £250m.
Gibbs claims this move won credibility with landlords and ultimately bolstered relationships to minimise the detrimental impact of lockdown restrictions:
“Ultimately, we felt strongly that this strategy - whilst representing a huge expense in the short term during what was an incredibly uncertain time for the industry - would pay dividends in the long run by breeding complete trust amongst our landlords and corporate partners.
“We knew that, whilst things would inevitably be painful in the depths of restrictions and economic closures, the move would act as a powerful springboard for growth in the wake of the pandemic; enabling us to rebound and re-align with our pre-Covid growth trajectory, as quickly as the measures and the market would allow. This is a move which now looks to be paying off as the market steadily recovers.
“This risk and expense incurred enabled us to keep control of all of the co-living properties within our portfolio, ensuring that our offering was never compromised for tenants seeking co-living solutions in the capital.
“The move also ensured that our landlords received full returns on their investments despite the sharp and aggressive market drop. It is our belief that this pain endured during the down market will enable future successes in the up market. This was very much front of mind for us as data collated on a global scale shows that the co-living trend is here to stay, and is unlikely to suffer long-term disruption as a result of the pandemic.”
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