Hmlet merges with European co-living player Habyt

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CO-LIVING startup Hmlet will merge with European co-living startup Habyt via an equity share swap, with Habyt founder and chief executive officer Luca Bovone leading the combined entity.

This comes after Habyt acquired two other co-living players, Milan-based Roomie in March 2022, and Frankfurt-based homefully in June 2021, making it one of the largest operators in the sector in Europe. Its portfolio has over 6,000 housing units across 15 cities in 6 countries in Europe.

Habyt and Hmlet also closed an undisclosed funding round led by existing investors Burda Principal Investments and Sequoia Capital, with new investor Sasscorp, the Sassoon family office. Other undisclosed existing investors also participated in the new funding round.

"I think all this goes to show investors are supportive of this direction that we are taking, which is global aspirations, and really expands our vision beyond Singapore and Asia," said Joshua Li, chief real estate officer of Hmlet. Li will be appointed head of expansion, APAC at Habyt post merger.

Informal talks about a merger between the two began in the third quarter of 2021, with the Habyt team travelling to Singapore the next quarter when things turned serious.

"This conversation was very natural among both of us. We wanted to start scaling, we wanted to be looking into this consolidation story, and Habyt wanted to move into Asia and have the presence in a second continent. So that's why it has been done with no cash involved and simply on a share swap," said Giselle Makarachvili, chief executive officer of Hmlet.

Makarachvili took on the CEO role in October 2021 after co-founder Yoan Komalski exited the company in March 2021. She will be the head of Asia-Pacific for Habyt post-merger. Hmlet will continue to operate under the Hmlet brand.

The Habyt merger marks a turnaround of sorts in Hmlet's fortunes from 2021, the year it raised a down round, or a funding round at a lower valuation, backed out of leases and had both founders leave. Now the co-living startup is riding on the tailwind of rising rental demand in its main markets of Hong Kong and Singapore.

Hong Kong has consistently performed well, according to Makarachvili, and the portfolio in Singapore has turned around with outstanding occupancies across all properties.

"Adapting to the local audience has been critical in maintaining our 90 per cent occupancies, because the fundamentals of our asset class is such that residential prices are still out of reach in Hong Kong," said Li.

Hmlet claims it has a 90 per cent occupancy rate in its Hong Kong properties, while its Singapore properties are 96 per cent occupied as at the end of March. The co-living startup recently launched a new property in Singapore, Hamilton, consisting of a row of 8 conservation shophouses with 68 rooms.

In Hong Kong, three new buildings, Hmlet Knight on Wyndham, Hmlet Portland Street and another centrally located hotel are slated to open in Q2 2022. The co-living startup says it is on track to manage 2,300 rooms by the end of 2022, currently managing 1,200 units across Singapore, Hong Kong and Japan. Post-merger, Habyt will manage over 8,000 rooms across two continents.

Competition in the co-living sector is rapidly stiffening, with competitors also looking to scale up their operations. Ascott, owned by SGX-listed group Capitaland Investment, this week announced plans to sign 150 properties with over 30,000 units under its lyf co-living brand by 2030. Ascott currently has 17 lyf co-living properties with over 3,200 units, having just opened a third property in Singapore with 324 units that it says are 85 per cent occupied.

The sector has seen a burgeoning number of co-living players. Over 10 players are competing in Singapore alone, with the likes of Cove, The Assembly Place and lyf all vying for tenants. This makes consolidation key for expansion, according to Makarachvili.

"That will allow us to significantly scale faster. We are in a business where scale really matters, and the combined entity will now be reaching more than 8,000 rooms under management, which really is key for becoming a global player in this sector," she said.

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