Co-living residents need more from operators than just a place to live

Co-living residents need more from operators than just a place to live

The co-living industry in Singapore benefited from a shift in the country’s rental housing stock this year. The government has responded to a market that was seeking a new equilibrium following a 30% spike in rental demand in 2022 by cautiously expanding the range of long-term housing options that are accessible.

Following the epidemic, the industry in Singapore has shown to be resilient, with operators creating long-term business plans and aggressively seeking out fresh expansion prospects throughout Southeast Asia.

Due to the market’s development, both local and foreign tenants now have higher standards and are looking for longer-term, more customized living arrangements rather than merely a four-wall room.

The Assembly Place’s creator and CEO, Eugene Lim, considers the shift in perceptions. When the co-living industry in Singapore was only getting started four years ago, most tenants believed that co-living was just like renting a room. However, tenant expectations of co-living products have increased significantly as a result of the market’s phenomenal evolution, particularly in the last two years.

In a similar vein, growing rental costs have caused a shift in tastes away from larger rooms and toward more affordable options, according to Luca Bregoli, co-founder and COO of co-living operator Cove, who also maintains a strict housing budget. This year, he believes, more people will be able to live in smaller spaces since, for the time being, they’re a more agreeable option than paying higher rent. The economics of this leasing industry require operators to be able to maximize space.

“Giving the hardware—a good location, a decent room with decent furnishings—is not too difficult. That’s really about making an investment to make a place look nicer,” Lim says, adding that the durability appeal of a high-quality co-living product—for which consumers are becoming more willing to pay premiums— is a feeling of belonging.

According to Lim, young, professional expatriates may first choose co-living arrangements as a means of easing their assimilation into the local community and fostering social ties.
Many operator-organized community activities, like walks, workshops, and yoga classes, sell out within an hour of being posted on The Assembly Place. According to Lim, “the majority of co-living tenants have come to expect this type of programming, which is very important.”

Nearly 60% of the renters at The Assembly Place are in Singapore for post-graduate studies, and at least 65% of them are under 35 years old.

Head for the top

Over 50% of all properties in Singapore’s co-living industry are managed by a small number of dominant firms. Coliwoo, a division of property management company LHN, is leading the industry with a 20% share, according to a June JLL market study.

Coliwoo has made rapid progress in the last three years to establish itself as the industry leader in co-living. In 2020, a four-story residential and commercial building in Balestier became the company’s first property to bear the Coliwoo name.

In August of this year, the company inaugurated its fourteenth property, a four-story residence in River Valley. The Coliwoo Hotel Pasir Panjang, a four-story building located at 404 Pasir Panjang Road, is its most recent addition. With 15 properties in Singapore now under Coliwoo’s management—many of them are joint ventures or master leases—the company now manages over 1,680 rooms.

The Assembly Place held the second spot with a 16% market share at the time of the JLL report. The business has been expanding quickly, and by the end of the year, it should be overseeing some 2,000 rooms. It opened a posh Tembusu Grand in Lorong J Telok Kurau in October, and in March it opened its first serviced apartment, YMCA @ Stevens, which has 46 rooms.

Homegrown brands Bespoke Habitat, lyf by Ascott, and Habyt, formerly known as Hmlet, are among the top five operators. Habit may try to dramatically expand in the next year under the direction of Jonathan Wong, the company’s new CEO for Asia Pacific.
Hmlet and European co-living provider Habyt merged in 2022. Hamlet kept its corporate identity until July, at which point Wong was appointed to his current role, and a rebranding project was launched. “My goal as I take on this role at Habyt is to support the expansion of the company in this area,” he states.

In Singapore and the surrounding area, co-living and flexible living have very solid foundations. The growing expense of affordable housing, the trade-off between living close to one’s place of employment and rental expenses, and a need for community and social interaction are some macro trends that, as we look to 2024, will support this demand.

Accept it or reject it

In the upcoming year, rent will be a major concern for a large number of long-term tenants in Singapore. According to a recent market study by Huttons Asia, private residential rentals are anticipated to increase by 10% this year after rising by 30% in 2022. Furthermore, it’s possible that HDB rentals will rise by 12% this year and an additional 8% in 2024.

The rental market has generally calmed over the previous 12 months despite this year’s double-digit rent rise. This is because there has been a decrease in the number of new employment pass holders and more than 18,000 new private residences completed this year. In contrast to the “take it or leave it” scenario in the past, some landlords are feeling the heat from reduced rents and exorbitant mortgage payments.2022, according to Lee Sze Teck, Huttons Asia’s senior director of data analytics.

The number of new private residential properties has loosened local landlords’ positions, and the majority are willing to reduce their rental demands. According to Bespoke Habitat co-founder Ernee Ong, “They also see it as a boon for their properties to be managed by a co-living operator.” The majority of the landlords they collaborate with are individual investors who own a few condos or low-rise apartment buildings.

Into the outlying areas

According to Wong, most professionals who choose flexible housing choices like co-living are shifting their preferences for where to work due to the rising acceptance of hybrid work in Singapore this year. “We used to be very CBD-focused, but we expect new demand of Tembusu Grand Showflat to come from suburban locations, so we’ve started moving aggressively into places like Joo Chiat, Serangoon, Bukit Merah, and Bukit Timah.”

Bregoli of Cove concurs and notes that renters are more inclined to commute in order to take advantage of lower rentals in the suburbs and city periphery rather than live close to the city center. Professionals tend to tolerate commutes better because they only return to work two or three days a week.

Bespoke Habitat, one of the most geographically varied co-living operators, was founded in 2019 and has homes in Jurong West, Queenstown, Tiong Bahru, and Tanah Merah. With 97% of its tenant base being international executives, students make up the remaining tenant base.

According to Ong of Bespoke Habitat, many of its Malaysian tenants have migrated to Johor this year after feeling that living in Singapore is becoming more and more expensive because of the increase in the value of the Singapore dollar in comparison to the Malaysian ringgit. Furthermore, some of its tenants in Singapore are signing shorter leases of three to six months, as opposed to the customary longer leases of a year or more, as a result of the increase in remote working options.

Obstacles in the distance

The difficulty for new operators to enter the co-living space is increasing as competition heats up. This is because, according to Lim, the majority of new co-living renters usually prefer the stability and security of housing with an operator that has a sizable scale and footprint in numerous neighborhoods. In order to draw in and keep co-living tenants, an operator’s reputation is essential. These days, it is getting more and harder for new companies to enter the market without having the size and flexibility to offer a greater variety of locations and room kinds.

Ong agrees, and the startup has expanded its clientele in the city-state thus far thanks to its stellar reputation. “The belief among property owners is that they are more inclined to collaborate and manage their assets with us if their asset proposition aligns with Bespoke Habitat,” he continues.
Wong identifies a number of obstacles that prevent many people from taking advantage of flexible housing or co-living choices, therefore the difficulties are not limited to co-living operators. In response, Habyt just announced that it has partnered exclusively with a local startup, Recently, to provide deposit-free rentals on its properties located in Hong Kong and Singapore.

Our long-term goal is to strengthen our position in Singapore and Hong Kong, two of the most important Southeast Asian marketplaces. In order to provide our member base with a wider portfolio, we aim to gain greater scalability in these areas,” Wong adds.

Plans exist to enter additional markets, including those in Australia, Taiwan, and Korea. “We can enter these markets through joint ventures with the right partners, strategic partnerships, or outright acquisitions.”

According to Wong, Bespoke Habitat intends to launch new businesses under its name. The company already employs devoted teams for remodeling and purchasing, as well as on-call handymen, air conditioning specialists, and cleaners who come to work on-site. We are more than just a property management firm these days. We also handle the amenities for the properties we oversee,” he says, adding that the business would soon look at entering the co-working market.

Bregoli anticipates that the supply of co-living and rental units will stabilize in the upcoming year. “This quarter, dealings with asset owners and landlords have been easier,” he says. As new home supply enters the market in 2019, we can witness a minor decline in the co-living sector’s overall rents.

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