More than a niche theme Smart living: Why micro-living continues to gain relevance

A good example of a real estate sub-segment that is largely acyclical can currently be seen within the residential sector. Particularly there, the focus is on such segments whose demand is less economically driven but more structurally driven: such as “Smart Living”. This term covers small and micro apartments, which are usually (partially) furnished and let for a limited period of time.  

This segment benefits from long-term drivers such as urbanisation, increasing mobility, demographic change and the trend towards smaller households. Compact, functional and well-connected accommodation is in demand for students, young professionals, commuters or people in transitional careers. They not only address a specific product interest, but also a real need for flexible living space in densely populated cities.  

The segment has already proven its resilience several times. After the pandemic, rising construction costs and a turnaround in interest rates, the available market data continues to show robust fundamentals such as solidly rising average rents and low vacancy rates. Incidentally, students account for just over a third of tenants, with the majority coming from other user groups. This width makes the segment less cyclical than the stereotype of pure student housing suggests. 

In addition, micro-living has become more professional in recent years. Operator structures, standardised processes and specialised management approaches have made the segment more “institutional”. At the same time, it remains a market in which location, operator quality and concept are decisive for success. Properties where universities, economic dynamics, transport connections and resilient demand combine are particularly viable. Micro-housing does not replace traditional housing construction, but can make sense to supplement it in tense markets and in some cases even relieve the burden.