Why You Should Tap into Subscription Living Now

min read

This is an updated version of the article that we have written for The Class Digital Trend Report 2021 in the section "Global Talent Mobility".

Today you might have started your morning using a Dollar Shave Club razor to trim your beard or shave your legs. Maybe you went to work driving a bike or a car from a shared service, like Share Now, while listening to Spotify, and your lunch was delivered to you by a supplier of healthy meals such as Home Chef. This evening you might relax with a fine pinot noir from your Wine of The Month Club while watching Netflix. Perhaps this is not the case, but have no doubt: the subscription economy is on its way to take over most aspects of your life.

After surfing the shared-economy wave of transformation, the subscription-based business model is thriving by fulfilling more and more of our daily needs and cashing in from innovative ideas and untapped opportunities. Subscription economy businesses allow their clients to pay per monthly subscription or long-term contracts to better suit their needs. Flexibility and convenience are the unquestionable benefits provided by the model, and forward-thinking real estate companies have already started dipping their toes in the trend through a promising format: subscription living.

The Subscription Model in Real Estate

The subscription model in real estate is not a new idea; Build To Rent (BTR) has been working with their own form of subscription leasing for ages. Businesses are now bringing flexibility and convenience to the table through a monthly subscription. For example, residents can choose to live for a period of time in a coliving community inside a vibrant city or in a charming house in an idyllic village. Prospective residents follow a smooth payment process and have the game-changing advantage of choosing, for any set period of time, the town or even country they want to live in. Subscription living simplifies the bureaucracy and eliminates long-term commitment to one specific living space - typical aspects of the BTR model - and amplifies possibilities of living and working experiences for its customers.

Economic and societal changes are creating perfect conditions for a subscription living model to thrive. The middle class’ purchasing power has declined in several countries in the last two decades. Furthermore, although they are the most educated age cohort to have ever lived, millennials are delaying milestones such as buying a home or car by as far as a decade compared to previous generations. Simultaneously, younger generations have lost interest in traditional ownership; nowadays they see greater value in quality of experience, freedom, diversity and sustainability. In addition, remote working has been on the rise since before the pandemic, and it is now sure to become more normalised than ever. To attend to the needs of both an eroded middle class and younger generation’s thirst for experience and functionality, subscription living presents itself as the most ingenious and overall pleasing solution for both users and investors.

Examples of Subscription Living Concepts

Subscription based housing services targeting digital nomads and travellers are turning up around the world. In Japan, ADDress offers unlimited living in any region of the country from 40,000 yen (approx. 320 euro) per month. The service promises properties complete with everything one needs for life and work, including an assigned manager/local resident that provides opportunities for interaction with the local community, unique experiences, and regional knowledge. While ADDress allows you to live in multiple locations in Japan only, the coliving platform Hafh extended their living subscriptions offer to over 500 locations in 250 cities spread over 25 countries, with a fixed monthly fee.

Moreover, the global hospitality platform Selina has recently launched Selina CoLive: a flexible rental program with fees starting from $300 per month. Selina’s CoLive package includes accommodation, unlimited use of their coworking spaces, a free daily wellness class and restaurant discounts, among other benefits. Guests that sign up for a living subscription can access all locations across 19 countries, and live in up to 3 locations around the world per month.

The Impact of Subscription Living for Shared Living Investors and Operators

When considering the world of possibilities offered by subscription living, Purpose Built Shared Living (PBSL) operators and investors should bear in mind that, for multiple reasons, subscribers are better than customers. Beyond providing recurring revenue, subscribers tend to purchase more and generate tailored market data. For managers with assets in multiple cities and countries, subscription living can be a solution for repurposing retail and commercial spaces to the residential sector. Adaptive reuse can save 16% in construction costs compared to new construction and reduce execution time in 18%, research shows. For coliving businesses and hospitality, subscription living can be structured as a partnership that provides subscribers with a wide range of spaces spread worldwide, accessed through a single platform. A subscription living network could help reduce the number of vacant apartments and private rooms while maintaining each businesses’ autonomy and respective business model.

Subscription living should not be underestimated and labeled as a market trend. The model can set in motion a paradigm shift for the way people live, work, travel and connect. Businesses and investors in real estate soon will have a choice to make: get on board the subscription economy or watch competition creatively fulfill the market's needs. Are you ready for what is yet to come?

Key Takeaway

As subscription-based services expand and reshape traditional businesses, the real estate industry is the next in line to get its piece of the subscription economy cake. Economical and societal changes created an ideal condition for the new concept of subscription living to thrive. Offering flexibility and convenience to consumers and a unique business opportunity to investors and  shared living operators, living subscription models present themselves as a win-win model to please all stakeholders. Living platforms around the world have already started to offer subscription based homes and others are adapting their business models to include a version of monthly-fee offers.

Subscription living can establish a new paradigm for how people live, work, travel and connect. Businesses and investors in real estate need to prepare to take advantage of the subscription economy, otherwise they will have to witness the competition creatively fulfil the market's needs.

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