The future of the co-living model in Nigeria

Co-living, as it is widely referred to, is an accommodation model where people from different families and backgrounds operate a shared apartment rental model. In many cases, these people who reside together form new friendship bonds and sometimes even work together. Just think about the possibility of different people (race, tribe, colour, language) of different backgrounds coming together to live within a shared space. That is exactly what this model is about. Operators usually offer furnished bedrooms and living rooms with individual contracts for each occupant and all-inclusive pricing, making this model more affordable to the unfurnished. Affordability is one of the key factors that make the co-living model attractive, especially for young professionals who are just starting out. In recent times, the co-living idea has been gaining traction around the world, including in Nigeria. One question that lingers is the sustainability of this model in a culture-dominated environment like Nigeria and what driving adoption is. This question is what we will be exploring in this article. Before we dive further, let’s get some historical context.

The emergence of co-living can be traced to the United States of America but in recent times, in advanced markets like Berlin and Copenhagen, the concept has progressively spread even more than the United States continued to sweep across Europe. While there has been increased adoption of this concept in most places around the world, certain cultural and safety concerns have hindered penetration in many countries, in the west and particularly in Africa. For instance, fears of “roommate roulette” have deterred many Americans from co-living outside of the Bay Area, an anomaly where co-living has become commonplace due to the high concentration of young creatives and tech employees living in a city with spiralling living costs. At the end of 2020, the world was estimated to have reached about 180 coving operators, 4,000 facilities, and more than 250,000 rental units. Approximately 900 new ones were estimated to have opened in 2020 alone. This represents a 30% increase for the year, according to Becar, an Asset Management firm with operational footprints across Europe. Compared across continents, Asia has the highest concentration of co-living spaces and controls 89% of the global co-living market. Due to its sunny climate and excellent value for money, Asia is without a doubt one of the preferred travel locations for digital nomads and remote working professionals. Digital nomads have arrived in great numbers in nations like Thailand, Indonesia (especially Bali), and Sri Lanka, and co-living groups have also grown significantly. In terms of co-living space units, Singapore, Hong Kong, and China are in the lead, with some really powerful developments becoming very well-liked among Millennials and Gen-Z. Three countries—China, India, and Singapore are home to 99% of the co-living spaces in Asia, according to a report by Becar. Europe and the United States are the second and third largest co-living markets, respectively. According to Becar, just over 5% of the co-living stock is in North America (97% of which is in the United States), and 6% is in Europe. By the number of sites, Great Britain (27%), the Netherlands (19%, France (12%), Germany, and Belgium (8% each) have the most co-living in Europe. Co-living communities can be found in South America in Brazil and Argentina, as well as in Africa – South Africa, Morocco and Australia now have Co-livings available.

Also read: Top 3 locations to live as a young family in Lagos

Outside of South Africa, the concept has been gaining traction in other African countries, including Nigeria. Despite a number of cultural challenges that have continued to impact growth and adoption, we expect that rental cost-related issues across Nigeria’s key cities, along with the exigent yearly rental model, will spur growth in co-living in the next few years. But how are existing operators fairing, and what does the future really hold for the co-living market in Nigeria?

The high living and rental costs across Nigeria’s key cities are making a strong case for co-living, but the lack of corporate supply continues to hinder growth

Co-living rental is a housing model that involves multiple individuals living in a shared living space. The idea behind co-living is to create a sense of community, reduce the cost of living, and increase flexibility for tenants. In recent years, the popularity of co-living has grown as people seek more affordable and sustainable housing options.

In terms of sustainability, co-living can be a more environmentally friendly option than traditional housing. By sharing resources like water, electricity, and appliances, co-living spaces can reduce overall energy consumption and waste. Additionally, some co-living spaces prioritize sustainable practices like using renewable energy sources, composting, and reducing single-use plastics. In the real sense of it, apartments in Lagos are becoming much less affordable to most of her young population. The rental rates for 1 bedroom apartments in Lagos areas like Yaba, and Lekki are moving north of NGN1,000,000 per annum. This is more than 50% of the annual income of the average young professional working in Lagos. This makes co-living a more financially appealing option for young people living in Lagos, given the economies of scale it provides.

Awareness and culture-related challenges have continued to hinder adoption in Nigeria

The co-living rental model has been slow to take off in Nigeria for several reasons. One of the most common is usually the cultural difference, and this applies across the continent. In many African cultures, there is a strong emphasis on privacy and personal space, which can make the idea of living in a shared space with a non-family unattractive to some. Co-living spaces are also still a relatively new concept in Africa, and there are few established commercial providers. As a result, there may be limited options available for those looking for a co-living arrangement with structure. The cultural impediments that exist are also limiting supply. Many people in Africa may not be familiar with the concept of co-living, which can make it difficult for providers to market their offerings effectively.

What does the future hold?

The future of co-living in Africa is promising as the continent’s population continues to grow, urbanize, and seek more affordable housing options. Here are a few reasons why co-living is likely to become more popular in Africa in the coming years:

Rising demand for affordable housing:

In many African cities, housing costs are high, and many people are struggling to find affordable places to live. Co-living can be a more affordable option than renting a traditional apartment or buying a house, which could make it an attractive option for many.

Changing attitudes towards communal living:

While co-living with non-family members may not be as common in African cultures as in other parts of the world, attitudes are shifting. Globalization is helping to reshape beliefs and thought processes, and as more young people seek out flexible and communal living arrangements, co-living could become an increasingly popular choice.

Growing interest from investors:

As more investors look to Africa for opportunities, co-living could become an attractive investment opportunity. This could lead to more investment in the industry, which could drive innovation and growth.

Potential for sustainable development:

Many African countries are prioritizing sustainable development, and co-living could be a part of that. By sharing resources and reducing waste, co-living is seen as more environmentally friendly than traditional housing.

Innovation in the industry:

There is still much room for innovation in the co-living sub-sector, and as more providers enter the market, we can expect to see new and innovative models emerging that are tailored to the needs of African consumers.

Overall, while there are still challenges to overcome, the future of co-living in Africa looks bright. As more people seek out affordable and flexible housing options, and as the real estate industry matures and evolves, we can expect to see co-living become an increasingly popular choice across the continent. Let us know what you think about this, and send your thoughts and comments to research@buyletlive.com

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