You are here
Co-living operators upbeat as they look to demand from new segments
CO-LIVING operators in Singapore remain upbeat despite - and in some cases spurred on by - the Covid-19 pandemic crisis.
In contrast to many businesses which are cutting back on operations, or mothballing their growth plans, the executives of some co-living companies say their expansion strategies are largely on track.
They say that in addition to expatriates, some locals are also increasingly opting for co-living to escape being stuck at home with family.
The industry - which is barely more than four years old in Singapore - has about 10 different operators. It is now tapping a growing demographic - young and mobile - who wants hassle-free affordable housing.
This means not having to deal with fussy landlords, security deposits and long leases. The co-living business model involves taking on long-term leases from landlords, redesigning the interior apartments stylishly, before marketing them as a brand to tenants.
The Covid-19 crisis may even benefit the operators as people facing salary cuts or lower rental budgets are planning to move from a one- or two-bedroom flat to a room in a co-living space. Some who have lost their jobs in Singapore can stay in a co-living room while figuring their next move, said the executives.
Co-living leases start from three months, come fully furnished, and its rental rates include all utilities plus cleaning. Operators will also organise events like special dinners/talks to foster a community experience, a practice currently on hold amid social distancing measures.
"Co-living remains quite buoyant - despite the (Covid-19) challenge," said Sophie Jokelson, the co-founder of Cove.
The Singapore-based company started in 2018 and has 250 rooms here; under construction is another 230 rooms in its second market in Indonesia. By the first quarter of next year, it is looking to double its offering and have around 1,000 rooms in Singapore and Indonesia, she said.
Occupancy rate at Cove is over 90 per cent with an average lease of 10 months, she said.
A co-living flat is typically shared among three people. Rents start from S$1,000 for a room with shared bath to S$2,200 for a master bedroom with attached bathroom.
Demand comes from young postgraduate students and professionals, older people staying single for longer, a growing pool of permanent residents (PRs) and the latest shift in behaviour brought about by Covid-19, she said.
Also adding to demand are young Singaporeans who have lived abroad and are finding it a challenge to live with their parents.
The "stuck at home" reason due to the circuit breaker period - which began on April 7 - has led to more enquiries of people wanting to move out, she said.
"We are getting young people stuck with families and find the experience intense," she said.
There are also locals, singles or newly-married couples awaiting their HDB flat who are opting for co-living, instead of living with their parents, she said.
Locals make up about 10-15 per cent of Cove's tenants, a proportion which surprised Ms Jokelson. Originally, she thought the bulk of her tenants would be expats.
As for its expat tenants, while there are no new expats coming in for the time being, there is still a big pool of them in Singapore including PRs who have settled here, she said.
Cove's tenants range from 19 to those in their mid-40s, she said.
"People are single for longer. The older single may not necessarily be constrained financially but want company," she said.
People think co-living is like staying in hotels "but we are not, most of our customers are looking for a home, not temporary accommodation," said Ms Jokelson.
lyf Funan, which opened in September last year, is another operator that continues to have a strong base of long-stay and corporate guests such as expats, embassy staff and government officials. Last December, it reported that occupancy had reached 98 per cent.
Operated by The Ascott Ltd which is part of CapitaLand, lyf has 412 rooms across 329 apartments.
Hmlet, the biggest co-living operator in Singapore with 1,000 rooms, continues to enjoy over 90 per cent occupancy, said its chief executive Yoan Kamalski. Hmlet rates start from S$800 for a room.
The company has another 1,000 rooms in Hong Kong, Sydney and Tokyo.
The average lease is 12 months and "most people are keen on renewing contracts," he said.
"Obviously we've people who lost their jobs and have to leave the country, we try to help them," he added.
"Rates are still stable," he said, because there is no significant decrease in rental prices in the private home market. While the economy is slowing, "in Singapore, there is a scarcity of space," he said.
Newbie Figment, which houses its tenants in shophouses, has seen its occupany rate drop to 70-80 per cent recently, said founder and CEO Fang Low.
Singapore's travel restrictions, plus the fact that some of its tenants have had to leave Singapore because they have lost their jobs, are among the reasons for the lower occupancy, he said.
Replacement tenants are on hold due to the circuit breaker, he said.
"It's not terrible compared to hotels, but it's not ideal," said Mr Low.
The country's hotel occupancy rates have collapsed since Singapore banned all short-term visitors on March 23. Visitor arrivals were down 84.7 per cent in March from a year ago.
Figment, which operates mainly in conserved pre-war buildings, has 65 rooms with an average lease of eight months, Mr Low said.
Despite that, Figment, which operates in the premium end of the industry, is unlikely to lower its rental rates, he said. Its rates range from S$2,000 to S$3,000.
"Our products are somewhat aspirational, so we believe the value is unique," he said.
The company works with local designers to fix up its heritage shophouses. It is doing up another four shophouses which will add 20 more rooms, said Mr Low.