With demand for city centre homes showing little sign of abating and developers increasingly mindful of catering towards budget-limited tenants and a younger clientele, the concept of compact living is well on the rise.

Studio flats and one-bedroom apartments have long been in steady demand for professionals looking to live in the heart of the action, but, as city demographics become more diverse and with tenants increasingly spending more and more time outside of their homes, compact accommodation is becoming highly sought after and provides a compelling investment opportunity for buyers looking to get ahead of the trend.

Living ‘compact’ in the city offers many benefits. For those working long hours it’s the ideal means of avoiding often costly and lengthy commutes. It can also be an affordable entry for investors and tenants alike into what is an already highly competitive housing market. What’s more, the best developments offer a host of facilities beyond just the accommodation to transform the resident’s experience, such as comprehensive indoor and outdoor communal spaces for socialising, co-working facilities and other on-site services such as laundry and gym spaces.

The wider economic argument for living smarter is also highly compelling. A recent study by Development Economics showed compact living developments could bring an additional income of £200 million and 1,000 new jobs due to increased household expenditure to central London alone. Multiply that across the UK’s other major cities like Birmingham and the numbers speak for themselves.

Compact living spaces can of course take many forms. Those based on a studio model (most recently known as micro homes) typically combine a bedroom, living room and kitchen area into one space, with a shower room and toilet ensuite. They also offer storage space to cater for essentials such as a washing machine, as well as space for shoes and clothes. Larger, one bedroom spaces offer all of that plus more storage and can prove more comfortable for cohabiting tenants.

For investors looking specifically at this area of the market, those properties benefitting from strong design are most likely to remain attractive to tenants over the long term. That means built-in storage, good light throughout the space and if possible, good demarcation between the living and sleeping areas.

Smaller properties are indeed likely to attract a more transient tenant who may only rent for a maximum of 12 months. That can sometimes mean more wear and tear, but the associated costs are usually more than balanced out by the smaller space being cheaper to maintain.

Ultimately, as more and more younger people flock to cities to live and work and space for developers in major conurbations comes increasingly at a premium, the trend towards compact living is one that’s sure to be on investor radars for the foreseeable future…

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