SINGAPORE (EDGEPROP) - While the Covid-19 situation has been playing havoc with businesses everywhere, co-living operators remain cautiously optimistic.
When contacted, many said they have stepped up precautionary measures by requesting declaration of travel plans for residents and visitors, communicating Ministry of Health (MOH) guidelines and increasing the frequency of cleaning and sanitisation. Some also provide their tenants with masks and hand sanitisers.
Operators admit that a long-drawn outbreak could keep away its expatriate clientele and impact business. However, some feel that the flexibility of co-living plays to their advantage during this challenging time.
As YOLOLive chief executive Loo Kian Wai explains: “YOLOLive is still garnering interest from expats who are already here in Singapore and previously leased from the traditional rental market. Our lease flexibility allows them to make plans for possible relocations. So, they opt for co-living as they still want to stay in a decent location but need to tighten their belts in lieu of the economic situation."
He adds: “On a month to month comparison, we do see that the market is slower, but we have good demand for our new location and will be expecting a 100% occupancy quite soon.”
YOLOLive, a newcomer to the local market, currently runs two co-living spaces at Jalan Besar and Clarke Quay. They will be launching their third space in Novena later this year.
The communal living room at YOLOLive’s Clarke Quay property (Photo: YOLOLive)
Targeted at millennials, co-living typically entails living in well-furnished rooms, usually in a prime location. They offer communal facilities and community events.
People who choose to co-live instead of renting the traditional way like its convenience as they get to bypass property agents and landlords. For the price, they also get access to a fully furnished apartment and weekly housekeeping services.
Indeed, for certain locations such as the CBD, co-living rent prices could be cheaper if the tenant can compromise on size.
For instance, rent for a common room at One Shenton starts from $1,800 per month. The rental price of an equivalent room size costs $2,155 per month under co-living operator Hmlet. However, the operator also offers a smaller room size (Pocket Room) costing $1,260 per month, inclusive of utilities and housekeeping. The tenant still enjoys flexible leases, stylish furnishing, a central location and upscale — albeit shared — amenities.
Giselle Makarachvili, Hmlet’s director of operations says: "We are seeing that longer term stays in our co-living properties are less impacted than hotels, serviced apartments and other short-term rentals. So far, none of our members have left because of the coronavirus outbreak."
Hmlet’s goal of reaching 5,000 rooms across Asia-Pacific by the end of 2020 has not changed (Photo: Hmlet)
“Hmlet’s goal is to provide 5,000 rooms across Asia-Pacific by the end of 2020 — and that hasn’t changed,” she adds.
Ian Lau, co-CEO for co-living space operator Commontown, says: “Co-living operators whose main source of leads are from the affected regions may see more immediate impact. If the situation worsens globally, co-living operators may see fewer take-up if companies or people pause overseas job posting plans.”
Despite this, he says that the take-up rate for rooms across its 17 properties has been consistent. Currently, Commontown’s occupancy rate stands at 95%, up from 90% six months ago. He remains cautiously positive and says that Commontown will take a conservative approach on its expansion plans.
Lau adds: “At the moment, the Singapore government has been managing the crisis well. We have not had any cancellations due to the concern about the outbreak. The immediate impact for us is adjusting operations to heighten safety and hygiene measures.”
Commontown Adria, one of the company's 17 co-living spaces. (Photo: Commontown)
Calvin Cai, country head of Login Apartment, shares that their occupancy has maintained at around 95%. He says: “The impact on co-living spaces or industries at large will be inevitable in this global pandemic. We do have incoming tenants that may have postponed their relocation plans and we accommodate their request."
Sector growth depends on long term impact
Hotels in Singapore saw occupancy rates dip below 50% last month, from nearly 100% just before Chinese New Year (Jan 25). Compared to hotels, co-living operators seem to be cushioned from the immediate impact due to relatively longer leases. The occupancy rate is also tied closely to expatriate job demand rather than tourist arrivals.
Co-living sees demand mainly coming from young expatriates here because it is not as popular among locals. This is unlike cities where home ownership is expensive and average rents have risen above average incomes, as Singaporeans have access to affordable public housing.
Ong Teck Hui, senior director of research & consultancy at JLL Singapore, says: “The co-living sector has been on the growth path over the last three to four years, finding increasing acceptance by mainly younger expatriate tenants who were attracted to community living. It was also aided by the government’s move to lower the minimum rental period for private homes from six to three months in June 2017, which provided more flexibility for co-living operators in catering to the needs of tenants.”
Co-living spaces here have to comply with URA regulations for short-term rentals and offer leases of at least three consecutive months. However, certain spaces can offer single-night or week-long stays due to the nature of building use.
The common area at Hmlet Cantonment, where the minimum stay starts from six nights as the property is classified as a serviced apartment. (Photo: Albert Chua/EdgeProp Singapore)
Such spaces thus present a viable alternative real estate asset. It leverages economies of scale by offering smaller rooms but more shared facilities, which means that more people per square footage use and pay for the space. JLL says global funding in the co-living space has increased by more than 210% annually from 2015 to 2019.
Last year, there were two high-profile funding ventures in the co-living space. Hmlet — the largest co-living outfit here — raised US$40 million in a Series B round, allowing it to expand in Melbourne, Brisbane and Tokyo.
Meanwhile, Singapore based start-up COVE also secured more than US$2 million in seed funding in September 2019. The company will use the funds to expand its presence in Southeast Asia. Dash Living, a Hong Kong-based property tech startup, also recently announced that it has expanded its presence to Asia Pacific by acquiring Singapore’s co-living company EasyCity, says JLL’s Ong.
In the near future, the growth of the co-living sector will depend on how long the virus outbreak persists, the extent of global economic slowdown and subsequent headcount adjustments.
There may also be a potential for the government to work with co-living operators. MOM has announced that the government will provide financial support and work with hotels and dormitories to help house workers who commute across the Singapore-Malaysia border frequently, amidst a recently-announced nationwide lockdown in Malaysia that will last for two weeks. Co-living operators who can offer week-long or single-night stays could benefit from this.