Asset-heavy operators own the buildings they operate. This captures full economic value (rent + ancillary revenue + property appreciation + exit cap rate compression) but requires substantial capital per bed. A 100-bed asset-heavy property in London costs €15-€30M; the same operating capacity asset-light costs the operator €1-€3M in capex and a master lease commitment.
Most institutional coliving capital prefers asset-heavy, it aligns more naturally with real estate funds' return architecture. Most operator equity capital prefers asset-light, it scales faster and creates higher revenue multiples on lower capital. The two camps coexist; many operators run hybrid portfolios.
Capital intensity math: a 100-bed asset-heavy coliving deal in London at €200,000 all-in per bed = €20M total capital; same in Mexico City at €60,000 per bed = €6M. The capital constraint is why asset-heavy operators rarely scale past 1,500-2,000 beds without institutional partners. Returns profile for asset-heavy: target IRR 15-22% over 5-7 year hold including property appreciation; cash-on-cash typically 8-14% at stabilization; exit value the dominant component (50-60% of total return). The trade-off: asset-heavy generates substantially higher quality earnings (real estate cash flow, not management fees), but operational missteps directly hit asset value. The fundable archetype: hybrid operator-developer JV with 25-35% operator equity, 65-75% institutional capital, 5-7 year hold, exit via institutional sale or recap.
In the field
The Collective was historically asset-heavy (Old Oak, Canary Wharf are owned). Mason & Fifth purpose-built asset-heavy. Greystar, Round Hill, Ivanhoé Cambridge invest in asset-heavy coliving via separate operating partners (typically Habyt or Common as the operator).
Common pitfalls
- ×Underestimating the working capital required to operate an asset-heavy portfolio, easily 6-9 months of operating cost in addition to capex.
- ×Capital constraints causing slow rollout, asset-heavy growth typically 1/5 the speed of asset-light at the same operator capacity.
- ×Interest rate exposure, leveraged asset-heavy is vulnerable to rate-driven cap rate expansion.
- ×Mixing asset-light and asset-heavy unit economics in operator KPI reporting, masks underlying profitability differences.