Demographic and residential market developments mean that creative and innovative solutions to housing are required. New housing solutions emerge and old ones re-emerge and are further developed. An example of a reemerging trend is value-based shared-living residence projects. There are various types of shared living, for example, senior citizen residential homes. However, in the past couple of years, single people and families with children of all ages have also seen the potential of shared living. The main benefits for those in shared-living residences include:

  • Being a part of a community at a time where traditional family structures are challenged by divorce, remarriage, etc
  • Shared economy and thus lower household and transport budgets
  • The opportunity to live with people who hold the same values, eg preferences for organic foods, concern for the environment, etc

As this year’s MIPIM conference highlighted, shared living is an emerging trend globally, and in Denmark, especially on the outskirts of Copenhagen, the trend is booming.

DLA Piper Denmark advises several project developers, some of whom focus on valuebased shared-living residences; one of these is EcoVillage ApS.

EcoVillage ApS

EcoVillage ApS (EcoVillage) was established by two siblings a couple of years ago. In that time, the company has been working hard to establish a value-based sharedliving residence built on the values and principles of the "eco village". Now, the first of the projects - which includes 45 residential homes and a 500-m2 common house with an indoor pool, teenage rooms etc - has become a reality. As at April 2018, 80 percent of the homes were sold. The project design is now being completed so that construction can begin, and the first residents are expected to move in in spring 2019.

EcoVillage understands that the values of shared economy, community and concern for the environment are values that matter greatly to today’s city dwellers. To meet those values and needs, EcoVillage’s sharedliving residence model is based on environmentally sustainable and organic villages, which set the framework for a shared economy lifestyle in sustainable homes.

More specifically, the projects include some (or most) of the following: shared kitchens with organic food, common animal stock, shared electric vehicles, solar cells, recycling stations, and systems to use rainwater in washing machines and for flushing toilets, etc. In addition, EcoVillage offers "microliving" homes, as small as 35 m2. Even though the residents of these micro-living homes live in relatively small spaces, they benefit from access to the large communal areas.

"Shared living is an emerging trend globally, and in Denmark, the trend is booming."

DLA Piper Denmark has advised EcoVillage since 2016 and continues to do so. We assist with all aspects of project development such as financing, structuring of projects, negotiations, etc. In a real estate market which has only been growing for the last four to five years, it has been hard work for EcoVillage to start up with no equity and no track record on the real estate market, combined with its vision of developing projects on valuebased shared living.

New markets, new challenges

There are several challenges inherent in the development of a value-based shared-living residence project.

The very nature of valuebased shared-living residence projects is based on several risks. The setup of legal entities becomes critical when it comes to allocating and mitigating these risks. Moreover, the formation of associations is an essential prerequisite for the project.

As with any other project development, financing is crucial. However, since value-based shared-living residences is still an emerging trend, the sources of financing are limited. Often, it is necessary to sell the properties while the project is still only at the early design stage, in order to raise the cash required to complete the project. Despite the risk to purchasers of buying real estate at the design stage, there has been a surprisingly high demand for properties at this early stage of the project.

The market for shared-living residences contains other players as well as professional project developers. Whilst the project developers set up the physical framework and legal setup before the community is established, large groups of people (typically between 20 and 40 families) establish the community, which goes on to create a shared-living space.

Project developers in this field need highly skilled real estate lawyers who understand their business model as well as the market. As noted earlier, the financing of these projects comes with some key challenges. Needless to say, obtaining sufficient financing or security from 20 to 40 families to start the project is a hard nut to crack.

Moreover, finding a contractor willing to establish different homes according to the wishes of 20 to 40 families can be difficult. In this regard, the ability to negotiate and draft the construction contract is essential. Furthermore, Danish legislation governing the building and selling of properties to private individuals (consumers) imposes some restrictions on the contractor, and this can also be problematic.

It is safe to say that the reemerging trend of shared-living residences looks set to result in more projects in the future, with the concept being further developed and spreading to other parts of Denmark. We look forward to continuing to assist players in this exciting area in years to come.