The Market Seen from the Street: Co-living in Portugal

Co-living: Is it just a trend, or is it here to stay?

The concept of co-living has moved beyond being a passing trend to establish itself as a growing reality in the global real estate market. Demand for flexible and shared housing is estimated to grow by more than 20% per year in major urban centers. The pandemic further reinforced the need for adaptable spaces that integrate a sense of community and respond to new ways of living and working. Major international funds are already including co-living and other hybrid models in their portfolios, demonstrating the profitability potential of this segment.

In Portugal, the co-living market is still in an early stage, but the potential is clear in cities such as Lisbon and Porto, which combine tourism, a large number of international students, and strong attraction for qualified workers. Co-living is not just a trend, but a concrete response to the demographic, cultural, and social changes in our cities.

Resident profiles are diverse, yet they share common needs: flexibility, cost predictability, and active social lives. Young professionals seek alternatives to traditional rentals, which have become increasingly expensive and restrictive. In Lisbon, for instance, the average rent for a two-bedroom apartment already exceeds €1,500/month in 2025 (Idealista), while in Porto it ranges between €1,100–1,200/month. Given that average gross salaries stand at around €1,500/month, it has become nearly impossible for young people to afford a rental on their own.

In this context, co-living emerges as a realistic and accessible solution. Digital nomads and relocated workers value short-term contracts with services included and immediate integration. International students and recent graduates find in co-living an intermediate option between student residences and traditional rentals. Adults in life transition — such as newly divorced individuals or those relocating — seek temporary solutions that still offer comfort and security. The resident profile in co-living projects is mostly young. In Lisbon, around 45% of residents are under 35, including young professionals, international students, and digital nomads.

From an economic perspective, co-living shows a profitability potential higher than traditional residential rentals. While average rental yields in Lisbon stand at around 3–4%, co-living projects in mature markets can reach 6–8%. This gap is explained not only by consistently high occupancy rates but also by the ability to charge a 15–20% premium compared to conventional rentals, justified by the convenience and included services.

The efficiency of the model relies on maintaining high occupancy levels, controlled turnover that allows price adjustments to market demand, and optimized use of common areas. However, challenges remain: higher operating costs, the minimum scale required by institutional investors (80–150 units for financial viability), and the complexity of management, which requires professionalization and know-how similar to the hospitality industry. Regulation and licensing in Portugal remain unclear, forcing projects to operate in a gray area between Services, Facilities, and Housing. Social acceptance is not always immediate, particularly in residential neighborhoods, where resistance may arise due to perceptions of elitism or gentrification. Entry costs are also high, as assets need to be well-located and achieve a minimum scale to be viable. Despite these obstacles, when overcome, co-living projects have proven highly viable and attractive to institutional investors.

Occupancy rates in mature co-living markets show the model’s resilience: in London they exceed 95%, in Berlin they hover around 90%, and in Amsterdam they reach approximately 88%, reflecting consistent and sustainable demand. Both Lisbon and Porto have strong scalability potential, driven by international demand and the concentration of students and foreign professionals. Lisbon, for example, ranks among the world’s top five destinations for digital nomads.

The urban and social impact of co-living can be very positive, contributing to alleviating the affordable housing crisis, fostering community life, reducing urban isolation, and encouraging efficient use of shared spaces. However, if positioned solely as a premium product, it risks becoming elitist and accelerating gentrification in areas already pressured by tourism and short-term rentals. The true social potential of co-living therefore depends on its implementation, as it can either become an inclusive and flexible housing solution or just another luxury urban niche.

But does co-living only make sense in central Lisbon and Porto, or could it also expand to well-connected peripheral areas?

Peripheral zones with good transport links offer lower land and operational costs, proximity to employment hubs, and accessibility to students and young professionals. Here, medium-scale projects — for example, 50 to 70 units — may not appeal to large institutional funds, but they could make sense for private investors, family offices, or specialized operators seeking to diversify their portfolios with alternative assets.

The future points toward the consolidation of co-living as part of the urban housing portfolio, complementing traditional rentals, student residences, and senior living. Digitalization, global labor mobility, and the growing attention of international operators to Portugal reinforce this trend.

In summary, co-living is establishing itself as a relevant alternative for young, international, and highly mobile segments, offering flexibility and housing solutions adapted to the urban challenges of the 21st century.

Cheers,

Gonçalo Carvalho Miguel