Micro-Living—a trend-setting asset class?

November 18, 2019

At the EXPO REAL Micro-Living: Small Space, Big Trend roundtable on October 8, 2019, a panel of industry experts discussed the extent to which the micro-living segment is establishing itself as a sustainable asset class and which specific concepts are coming to the fore. Moderated by Ulrike Trampe, Editor-in-Chief of DW Die Wohnungswirtschaft, the illustrious panel included Alexander Kersting of CB Micro Living GmbH, Gunther Schmidt of the Quarters Group and Felix Embacher from bulwiengesa AG. They were joined by Thomas Jebsen, Member of the Board of Managing Directors of DKB Deutsche Kreditbank AG, who contributed a financing perspective to the discussion.

Specialized concepts within the wider asset class

A variety of specific concepts have emerged within the micro-living segment, varying in terms of location profiles, target groups and service offerings. Project developers such as the Medici Living Group and its Quarters brand have built an international profile, focusing on the world’s Top 7 mega cities, co-living and assisted living communities. Others, such as CB Micro Living, are increasingly targeting attractive B-cities as they launch a wide range of concepts, from student accommodation to micro-apartments combined with care services. Felix Embacher of buwiengesa AG predicts a positive future for the micro-living segment, as long as niche markets continue to be served and expanded in line with demand.

Small spaces are a big trend – but big enough to become a sustainable asset class?
Small spaces are a big trend – but big enough to become a sustainable asset class?© shutterstock / Robert Kneschke

Factors for success

In addition to developing micro-living schemes at the right locations, the industry observers unanimously agreed that success in the sector also depends on marketing to the right target groups and offering the optimal additional services. Tenants are attracted by all-inclusive internet access, cleaning and laundry services, as well as straightforward communication with residents. Digital services are becoming increasingly important. As an example, the Quarters Group has launched its own app, which allows tenants to contact the company around the clock via an integrated chat function. From the point of view of financing banks, Thomas Jebsen stressed the need for companies in the sector to conduct careful competitive analyses.

The panel’s different perspectives combined into a positive overall assessment of the micro-living asset class, while they did also recognize that the segment is still in a phase of growth and consolidation. In a recent study of the German market, bulwiengesa reported large numbers of new developments, with the trend set to accelerate even further. According to bulwiengesa, some 42,000 student and micro-living apartments were under construction or in planning in 2018, with an additional 17,000 serviced apartments also in the pipeline. There are concerns, however, that there is still a paucity of transparent data for investors, especially in relation to property valuation, and that the different concepts and products still need to clearly define their unique selling points.

Irmelin Ehrig

Trade editor & press officer building/real estate, CEO