Microapartments in the pandemic: Strengthened or dead?

Is microliving one of the victims of the coronavirus?

No. The current market situation merely reflects uncertainty, but does not represent a trend reversal. For example, around 500 development projects with 50,000 student and business apartments are expected to be completed in Germany by 2025 - which would double the current stock of privately operated properties in this asset class. That's because Covid-19 has no influence on the major demographic and lifestyle trends. The number of single households is rising. Already, construction completions are insufficient to meet the demand for one- and two-bedroom apartments in major cities.

And flexibility in the world of work is also a trend that Coronavirus has tended to accelerate. Project work, working from home and office presence in alternation, location hopping - this requires a combination of furnished living, service and a short-term lease being available. Digitisation is also gaining further momentum. With smart living, app services and parking space booking systems, the microapartments, which are mostly aimed at a young target group, are setting new standards here.

What would you regard as a typical microapartment?

 

What role does Germany play as a location?

So rather: In the crisis lies opportunity? 

There is definitely an opportunity for the market to emerge stronger from the pandemic. Low market entry barriers enable new players to quickly establish themselves with their brand and their own concept in the market. This makes substantial and rapid growth in the range and amount of microliving on offer possible. One thing is certain: It is an exciting market with many options for those who are ready to act now. In our view, the greatest growth potential is promised by expanding the target group to include the rapidly growing older segments of the population.

Would that mean saying goodbye to young professionals as a target group?

The microapartment market offers considerable opportunities for the future if investors and operators develop concepts tailored to particular target groups. The demographic structure in Germany shifting towards older age groups. Ever more people want to actively participate in life, even at an advanced age. Many of them are therefore looking for microapartments close to the centre and with high-quality furnishings that meet their requirements and living situation. This is a solvent additional target group for small apartments and microapartments, especially if services, such as a laundry or mail service, are also integrated into the living concepts. This does not mean saying goodbye to young professionals as a target group, but opens up the microliving segment further.