We’ve been wanting to open an affordable co-living space (combined with work space) for ages. The challenge with focusing on short term leases in the UK is we’ve never had the right building, of the right size, with the right planning permissions, with the right lease length, to justify the outlay in which to make it happen.
So why don’t we buy a building?
For us buying in London is quite a difficult proposition. I’ve bootstrapped the company from £1,500 (everything I had when I started) to a turnover of £1.5m pa with no debt or investment, for us to find a circa 30% deposit to buy in London would mean we’d be looking at a £million+ deposit in order to purchase a building of the size we’d like, …and I want the membership to be affordable.
My aim is I want to charge £250, about the same price as the average hot-desk space in London, but the difference being it’ll include a private bedroom in a shared building, with free access to the communal spaces, kitchens, work spaces and offices etc… a mini community of entrepreneurs and digital nomads! I believe it’s achievable, but obviously not in London.
So I began thinking about where is an affordable and suitable location in Europe, somewhere cheap to get to and with warmer winters, as those of us in Northern Europe get slightly downbeat / grumpy from November – March. Let’s kick the winter blues.
- Lisbon: We’ve tried Lisbon and yes it was pretty good, but its over priced and the market is saturated. Yes I’m not denying that November through to March the UK weather is miserable, but Lisbon’s winter climate doesn’t really give “winter sun” either!
- Berlin & Paris: are not that much better than London in terms of affordability… and the weather is just as bad, regardless of what they may say.
So we looked a little further south, in fact as far South as we could whilst still being inside the EU, and actually found the perfect climate (Not too hot in the summer, not too cold in the winter).
We’ve found and viewed quite a few reasonably priced buildings in the Canary Islands, that make the numbers achievable. They ticket all the right boxes, however as with all business ideas there are equally some risks that need to be “measured”. Business isn’t an exact science, and not every business idea will be a success.
So below I’ve tried to summarise more of the thought process, both the risks and positives as I need everyone to fully understand the challenge/opportunity/risk.
Do the Canary Island’s have a perception problem?
I know the older UK perception of Canary Islands is very much “playa de las americas” / “Brits abroad”, and that may have previously put a lot of people off the Canary Islands as a destination. However the islands due to their location and topography are truly stunning, massively different from the small location that derives our perceived view of the destination.
Tax 4%… Canary Islands have a nice perk.
The tax benefits of starting up in the Canary Islands are its biggest advantage. Canary Islands enjoys a different tax regime, operated by the Economic and Tax Regime of the Canary Islands (REF). Under this regime, companies are subject to a reduced tax rate of 4%, exemptions in the Canary Islands General Indirect Tax (IGIC) and Property Transfer Tax and Stamp Duty.
Weather / Climate
The screenshot / information below is taken from the MET Office website. Find winter warmth, without leaving the EU.
Transport from London / Paris / Berlin / Amsterdam / Madrid / Barcelona / Stockholm / Oslo etc
For about the same price as train ticket to Manchester I can get to Tenerife… this is one of the most significant reasons we prefer Tenerife over lets say La Palma. Tenerife is very much more accessible from major European cities, both in terms of flight costs and numbers of daily flight options.
I’ve posted screen grabs from skyscanner below, we didn’t even pick the cheapest month and flights are in general well under £100.
As Wifi is now available on flights, the flight time is no longer “down time”, unless you want it to be.
Where specifically are we looking? …and why.
As mentioned above our main focus is now Tenerife; having two airports and the cost per flight to major cities make it a destination we believe we definitely can make work.
We’re most interested in what we consider to be the “green side” of the Island (I’d say North, but that tends to refer to Santa Cruz and the North airport, so I’ve drawn a line on the map below). Buildings to the North of the green line are preferred, we will however consider buildings the other side of the line, however the economic argument would need to be very compelling as it’s not really where we desire to be.
Yes it’s part of Spain and the main language spoken is obviously Spanish, however its been a tourist destination for such a long time that most people can also speak English which makes the transition quite easy.
The collapse of travel operator Thomas Cook, and it’s impact on the islands.
Tourism accounts for almost 12% of Spain’s GDP; in the Canaries, that figure rises to more than 35%. Until the collapse a quarter of all the tourists coming to the islands came with Thomas Cook. That’ll obviously have a huge impact, especially as the UK and German economies aren’t exactly motoring at present. I think us adding to a very early stage startup eco system could be a small but important starting point to try and fill the gap / balance the economy.
What we’re looking for…
Here is our approximate criteria (wish list) for buildings, not everything is essential, it just helps act as a guide.
- Mixed use commercial preferred (…but we’re happy to work with securing planning permissions if needed, as we are intending to bring businesses to the location and therefore jobs / international investment. For these reasons we hope local regions would be supportive of our plans).
- Roof top / outdoor garden
- We’ve already viewed a fair amount of buildings and know the market well in terms of costs £/€ per sq/m.
- We’d be looking to charge less than the average cost of a fixed desk space in London (for both live and workspace). Each individual would have their own bedroom with access to shared kitchen, and also include free fixed desk space in the coworking / work space.
- Long term & Short term options: Long term This makes it truly affordable and people can come to the islands to save money and build their tech businesses, but also Short term as a get away destination from busy city life for focus and/or team building.
- We’d look if possible to also do short-term holiday lets to generate initial income whilst we build the community of entrepreneurs and digital nomads, so there was another income stream to cover/support the initial setup costs
- We’ve got a reasonable deposit for a mortgage
- Size preferably bigger than 400m2, but willing to look at stuff that is much much bigger.
- A short walk to the beach / waterfront would be amazing
- Sea views
- Close to somewhere with decent surf?
- In or close enough to a large’ish urban area a) so locals can also use the space b) so we can get everything we’d need and want as a community (we could however provide transport options, electric cars, scooters, bikes etc, for our members to use).
- We would be interested in bank owned / repossessed properties, we think we can be mutually beneficial to the bank, ie take out a mortgage with them or we’d be willing to consider a joint venture in their empty asset if we felt they were the right business for us to work with.
- Scope to extend / develop the property would be amazing, so we can grow rather than move once we’re full.