The Millennial move towards communal living, or coliving, is opening up opportunities for real estate developers and investors in Asia’s busiest cities. said a report by JLL. Co-living, a term used to describe a living arrangement that is something more than shared space, is growing in Asia.
Typically, a coliving facility will offer tenants small rooms but also shared facilities such as a TV room or a gym. There is also a social aspect; some facilities have a manager who will organise events. As well as convenience and community, co-living facilities also claim to offer cheaper rent than an individual apartment.
At present, some developments described as co-living are no more than upmarket dormitories for budget-conscious students, while others are just shared apartments with different branding. But from the property investor’s point of view, co-living offers an attractive opportunity to gain extra revenue from services and to be able to fit a larger number of rooms in a single building. Hotel owners have also been converting under performing hotels to co-living facilities.
In Singapore, affordable public housing is available to a large portion of the population and perhaps due to this, there is only a small portion of rental housing or co-living establishments. One of the key challenges faced by the co-living market in Singapore is the deeply entrenched home-ownership culture among Singaporeans which, coupled with the ability to unlock savings in Central Provident Fund’s Ordinary Account through property acquisition, has contributed to Singaporeans’ preference to buy rather than rent.
The report noted that some Singaporean companies are testing the water on coliving.
“In Singapore, the more common form of co-living operation is the asset-light leased model. For example, when Hmlet first entered Singapore, it started by renting units at different condominiums from individual landlords. To reap economies of scale, Hmlet subsequently also leased two entire residential buildings at Joo Chiat and Sarkies Road and converted them to dedicated co-living facilities.
Image credit:: Ascott Residence Trust
In contrast, the business model of lyf, which is backed by Singapore’s largest serviced residence operator, The Ascott Limited, is a mix of an owner-operated and management contract basis. Their first co-living facility in Singapore, lyf@SMU, is a Living Lab at the Singapore Management University (SMU) which The Ascott Limited has co-invested in and co-managed with SMU.
For lyf’s upcoming facility at Funan Singapore, The Ascott Limited, through its serviced residence global fund with Qatar Investment Authority, has reportedly paid SGD 90.5 million to CapitaLand Mall Trust to acquire land for the serviced residence component and will spend an estimated SGD 80 million to develop lyf’s flagship co-living facility in Singapore. The Ascott Limited also won a management contract from developer Low Keng Huat to manage lyf Farrer Park Singapore which is expected to be completed in 2021.”
The JLL research paper on coliving in Singapore said more players in Singapore could move into the owner-operator model soon following JTC Corporation’s move to put up a pilot Concept and Price Tender to build, own and operate a co-living development at Nepal Hill in onenorth.
“This facility will allow co-living residents to have their own bedrooms with an attached bathroom and they would share communal spaces such as kitchens, lounges and living/entertainment areas with other residents. The plot of land is zoned as residential and will be approved for serviced apartment use to cater to residents who are envisaged to stay between two weeks and one year.
Tender for the site closed on 30 July 2018 with four bidders vying for the site. The site was eventually awarded to Ascott Residence Trust who offered the highest bid of SGD 62.4 million for the site, together with a proposal that features creative use of communal spaces and comprehensive programmes to promote social bonding, wellness, personal development and business networking for future residents. The new facility, to be named lyf onenorth Singapore, is expected to complete in 2020 and will open for business in 2021.”
The JLL report said that in Singapore, coliving space primarily appeals to millennial expatriates, and that demand was boosted by the rising number of single-household expats engaged on a contract basis or working on project assignments. It added that the one-stop services offered by co-living operators provide expatriates with an alternative accommodation option that is simpler than renting a conventional room and cheaper than renting a serviced apartment or hotel.
Given the more than 1.6 million foreign population in Singapore (including permanent residents but excluding construction and foreign domestic workers), there is potential for growth for the coliving market in Singapore said the research report.
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