Colonies, a French company specialising in shared accommodation, has raised a real estate fund to the tune of €1bn from American group Ares Management Limited, via its Alternative Credit Strategy fund. This fund is intended for the acquisition, renovation and management of around 2,000 flats in Western Europe and the development plan includes housing in Luxembourg.
Created in 2017, Colonies currently houses 11,000 tenants in 180 residences, mainly in France (Paris, Lille, Bordeaux, Marseille, Nantes, Fontainebleau) but also in Germany (Berlin). It is developing its shared-rental model through three types of products: large projects that occupy the whole of a new building, with large flats of 8 to 12 rooms connected to shared lounges and kitchens, and common areas on the ground floor such as cinema rooms, sports rooms or teleworking spaces; large houses, such as mansions, that can accommodate 6 to 12 shared tenants; and flats that are refurbished to accommodate shared-rental units. The latter project type is specifically the one that Colonies intends to develop in Luxembourg.
Development also in Luxembourg
“One of the founders of Colonies is from Moselle and Luxembourg has always been part of our international development plans,” explains Martial Robardet, Colonies' Benelux director. “We are well aware that the market is tight in Luxembourg, but thanks to our fundraising, we have the opportunity to position ourselves on ageing properties, renovate them and put them back on the market for shared accommodation. By doing this, we are targeting between 200 and 300 rooms for Luxembourg and we hope to be able to start as early as 2023.”
As for the location of the properties, Colonies wants to position itself in cities where young working people are located, meaning mainly Luxembourg and Esch-sur-Alzette. “We are looking to meet a need and are mainly targeting young working people as our customers. This is why we want to offer housing that is still relatively affordable, but with a high level of service. For Luxembourg City, we think we can offer flat-shares at around €1,000 per month, including all charges, insurance, internet.”
This fundraising will allow Colonies to double the number of homes under development and quadruple the number of tenants by creating more than 2,000 new flat-shares for over 10,000 tenants in France, Germany, Belgium and Luxembourg. “15% of this money will be reserved for Belgium and Luxembourg, which is relatively significant given the volume of the population concerned,” says Robardet.
Real estate recycling
Colonies announced its ambition to develop in Luxembourg in March 2020. This ambition is now taking on a much more concrete form thanks to this new financial flow. "Colonies will invest around €50m in Luxembourg, for the acquisition of existing properties and their refurbishment. This will also help to reduce the carbon footprint in the real estate sector.”
The partnership with Ares is also an innovative approach. “This is the first time that an investment fund has positioned itself in this type of product,” explains Robardet. “This is not an investment in major projects, but a form of real estate recycling. For Ares, this will allow it to benefit from a larger stock of properties that are also more accessible. It is a new aggregation strategy. This approach has already taken place in retail with small shops, but not for residential. So this also allows Ares to position itself in a new type of fund for its investors.”
This story was first published in French on . It has been translated and edited for Delano.