Strong structural and demographic trends continue to underpin occupier and investor demand in the living segments, according to Cushman & Wakefield’s latest European Living Investor Survey.
Across Europe, two-thirds of respondents hold allocations of 20 percent or more in the sector. Total returns reached 6 percent in 2025, and almost all investors expect to increase their allocation to living segments over the next five years. Germany, Spain, and the UK are the preferred top three countries for living investment in 2026.
Dual branding
Combining living concepts and hospitality can be a way of extracting higher returns. For instance, a Choice Hotels franchisee acquired a portfolio of non-medical senior residences. With studios, one and two-bedroom apartments, 24-hour onsite staff, housekeeping, restaurants, pools, gyms and other facilities, the properties were essentially aparthotels but were under-performing with less than 50 percent occupancy, said Tobias Reinecke, head of investment & development EMEA, Choice Hotels International.
“So, we worked with the franchisee to find a way to drive more business. And we came up with the solution of dual branded properties: still senior residences but with certain floors converted and exclusively made over for hotel use, so he can utilise the existing staff and facilities that he already has on site.”
New skills
Rather than only selling fixed monthly rentals to families with elderly parents, employees were trained to sell hotel rooms, establish local corporate accounts, and use dynamic pricing and a property management system. Some fixtures and fittings also needed to be modified to make the properties more hotel-like.
Hospitality companies operating in the living space typically bring in revenue management practices and a sophisticated sales approach, leading to higher EBITDA, added Jason Leong, executive director, head of investment and asset management, Frasers Hospitality.
Dynamic pricing
“A leasing agent will just lease out apartments at the same rate. But if I’m at 90 per cent occupancy and I’ve got five more apartments left, I can charge more. And the way I sell will be very different regarding offering services and community initiatives with the other tenants in the building. This is the approach that allows a hotel company to charge a premium for living products,” he said.
Australia-based Pro-Invest Group has been active in hotel operations and investment for more than three decades. In recent years, the group has taken a strategic pivot into the residential living sector, converting under-performing hotels and offices into new living concepts.
Higher margins
Some of these properties provide standard transient hotel stays plus average rental stays of eight months within the same building. For the rental housing, the GOP margin is 75 percent compared to a 50 percent margin for select service hotels, said Sabine Schaffer, co-founder and managing partner, Pro‑invest Group. Centralised services, lower operating costs plus longer stays result in higher EBITDA, she said.
Habyt started out in 2017 managing a single co-living apartment in Berlin. In less than a decade it has expanded organically and via M&A to manage 15,000 units in 30 cities. This year it sold the operating rights of its Asia Pacific co-living portfolio to Mitsubishi Estate, and sold its co-living portfolios in Paris, Lisbon, and Madrid to local operators.
Lower opex
Habyt’s CEO and founder Luca Bovone explained why: “Co-living is where Habyt started, and it remains an attractive segment. But the model needs to evolve. Managing 300 units across 15 small townhouses is a very different business from operating 300 apartments in one fully amenitised property. The latter gives us stronger control, better service quality, more consistent standards and the ability to build a real hospitality brand.”
Lower staffing levels contribute to profitability, he noted: “In Madrid, for example, we have seven staff for a 300-key apartment building. It’s fairly light touch but still enough service for the customers to like the product.”
Targeted demand
Co-living and flex living products typically serve the needs of a specific demographic: 18-to-35-year-old professionals with annual salaries of more than €46,000 (or the upper quartile of earners). Corporate clients and relocation agents are obviously primary sales targets. This real estate category sits between purpose-built student accommodation (PBSA) and build to rent (BTR).
What’s behind the strong demand for co-living and flex living? Schaffer said: “I’m from Austria and most people rent because they can’t afford to buy and that’s been the case for a long time. Home ownership for the younger audience will be pretty much impossible.”
Flexibility
Leong described a similar situation in Asia and added that many people in their 20s and 30s are not ready to settle down: “Housing prices have become very expensive. Do [young professionals] want to really set up a base and find an apartment in a particular city, or do they want flexibility?”
To capitalise on strong demand, Frasers Hospitality is set to open 18 new serviced and hotel residences across Asia by 2028.
Turnkey bundled housing solutions are attractive for this demographic, added Schaffer: “It's nice if you don't have to worry about furniture, if the asset looks good, if you get some level of amenities, like water, electricity, Wi-fi, gym membership, and all that stuff.”
Community
Another important draw is the prospect of living in a social environment with a community programme. Pro-Invest Group’s apartments obviously have their own individual kitchens but there are also communal kitchens for tenants to share and socialise in.
Leong at Frasers Hospitality described a Shenzhen property with flexible public spaces that serve as co‑working areas and host community programming tailored to the local workforce. “The programming is designed to engage the local IT professionals, so they get a chance to network with their peers in the same industry,” he said. This curated community element supports a premium over conventional rental apartments, he added.
Quotes taken from the ‘Living concepts: hybridisation of hotels and the hotelisation of living’ session at IHIF EMEA 2026 in Berlin. The panel was moderated by Philip Bacon, senior director, Horwath HTL.