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SINGAPORE (Oct 7): In the lobby of the newly launched lyf in Funan is a ball pit to jump into. There is also a GIF booth, where guests can ­create their own moving images to share on their social media platforms. But this is not a children’s den. It is one of the latest co-living spaces that have opened in ­Singapore, targeted at young professionals. Co-living also represents a growth market for a number of public-listed companies.

The lyf brand is owned by The Ascott, the lodging business of real estate giant CapitaLand. The other players in this market include Singapore-based start-up ­Hmlet, which has partnered with real estate management services group LHN to build its facilities; Shanghai-based start-up Login Apartment; and CP Residences.

Indeed, the co-living concept, taking off in uber-urban areas such as San Francisco, New York and now Singapore, is said to address the housing needs of millennial expatriates by offering them a private space in a shared apartment with several common areas, which are used to host social activities. Global funding in the co-living space has increased by more than 210% annually since 2015 to total more than US$3.2 billion ($4.43 billion), says property consultancy company JLL.

According to JLL, the Singapore government had indicated support for the growth of these companies in the co-living space, with its plan to lower the minimum rental period for private homes from six to three months in June 2017. This should make it easier for co-living operators to attract those who want greater flexibility in their housing options.

New way of living

lyf Funan Singapore is located inside ­CapitaLand’s Funan integrated development and is, to all intents and purposes, managed by millennials for millennials and the ­millennial-minded. With 412 rooms across 279 apartments, the property claims to be the largest co-living space in Southeast Asia. Ascott plans to launch seven more lyf properties by 2022 — in Singapore, China, Japan, Malaysia, Thailand and the Philippines.

lyf is the only co-living space in Singapore with a hotel licence to allow for single-night stays. Mindy Teo, lyf deputy managing director, tells The Edge Singapore that it is mainly millennials and the “millennial­minded” who are looking for short- and long-term accommodation.

Teo says key drivers for long-term stays include delayed home ownership among young professionals and the global nature of jobs today. She expects younger expatriate workers in densely populated cities to be looking for housing options that offer higher flexibility. Indeed, according to a report by JLL, most co-living facility users were willing to pay up to 10% more to live in a co-living space instead of renting a regular flat or apartment. About a quarter of them were even willing to pay over 20% more.

“Apart from the apartment space they rent, members will also get access to the social spaces, as well as to the community events hosted by the co-living operator. On top of that, the co-living facility doubles as a co-working space, so you would not need to get a separate co-working membership,” explains Teo.

Other benefits of co-living spaces include weekly housekeeping services, as well as security, basic utilities and internet connectivity.

“Even the government recognises the benefits of co-living spaces and has awarded a site in one-north through JTC for a purpose-built co-living facility,” note Tay Huey Ying, head of research and consultancy at JLL Singapore, and Michelle Tee, director of research and consultancy, in a survey titled “Co-living in Singapore”. The site has been snapped up by Ascott Residence Trust, and a lyf property is scheduled to be launched there in 2021.

From the perspective of the developer, building co-living spaces is also more profitable. “Co-living properties have smaller units compared with serviced apartments. So, if you were to take the same gross floor area for lyf Funan and do up a serviced apartment, you would get 40% fewer units. With lyf, we are able to generate 40% more inventory, and thus more revenue,” says Teo.

At the same time, the spaces can be used for various activities. For instance, lyf Funan’s social pantry is used by guests to have breakfast in the morning, and after that, as a co-working space for the rest of the day. “We are able to keep the space efficiency of the net lettable area versus gross floor area at 65%. So, it presents as quite an attractive real estate investment option. I think in global markets, there is also a lot more interest in capital flows towards co-living assets,” says Teo.

Apart from Ascott’s lyf, another major player here is Hmlet, considered Asia’s fastest-growing co-living operator. On Aug 27, it launched its latest and largest facility so far — Hmlet Cantonment in Tanjong Pagar. Although it does not own the largest co-living property in Singapore, it owns the most in terms of locations. As at Sept 8, Hmlet had a total of 93 locations worldwide, with 38 in Singapore, 50 in Hong Kong and five in Sydney.

Currently, Hmlet has a 92% occupancy rate across the region and its members stay an average length of 13 months. In fact, 40% of new customers at Hmlet have been referred by existing members and alumni.

“This has been largely attributed to the wide range of community events that our friendly community managers organise, such as barbecues and quiz nights, as well as the communal spaces in our properties that encourage chance encounters among our members,” says an Hmlet spokesperson.

Hmlet’s co-living facilities are developed in partnership with LHN Facilities Management, an indirect subsidiary of LHN. In this partnership, Hmlet is in charge of the design input and concept, while LHN will carry out renovations according to Hmlet’s design specifications.

The site of the new Hmlet Cantonment, which will have 150 individual rooms, was formerly the headquarters for Singapore’s Corrupt Practices Investigation Bureau (CPIB) and, before that, Keppel Primary School. The area has been declared a heritage site in Singapore, limiting the amount of renovation works allowed there. However, Hmlet was able to introduce additional facilities such as a plunge pool, wellness studio and an all-day in-house café.

Most of Hmlet’s properties have a minimum lease of three months. But Hmlet Cantonment has been approved by URA for short-term stays of at least six nights. Depending on the room category, weekly stays range from $1,105 to $2,240 ($145 to $320 per night), while guests who book a three-month stay and above will enjoy preferential rates from $3,240 a month.

In Myanmar and Singapore, LHN also manages 85SOHO, a co-living space and serviced apartment. However, this co-living space targets students. The group has also secured a 15-year lease for a building to set up a co-living and co-working space in Quanzhou, China.

Another co-living player in the market is China-based Mamahome, in which City Developments (CDL) invested about $20.4 million for a 20% stake in 2017. Mamahome is owned by CF Investment Holdings, which in turn is owned by Login. Mamahome is at a smaller scale compared with Hmlet and lyf. It offers rooms for rent on behalf of homeowners at Alex Residences, a 429-unit high-rise condominium located near Redhill MRT station. The development was completed and sold out at end-2017, with rents said to start from $1,300 a month.

Local bank United Overseas Bank in December 2017 partnered with Mamahome to integrate the UOB Virtual Account Solution within Mamahome’s online web service and mobile application. Through this payment solution, tenants will receive a unique virtual account number assigned to the property they are leasing to pay their rent. The unique identifier enables Mamahome to identify and reconcile quickly and easily the property- related payments it receives.

Can this trend live on?

For 3QFY2019, LHN’s revenue increased 5.6% y-o-y to $27.8 million, mainly because of the increase in revenue from the commencement of operations of new premises under the co-living business in the residential property sector; management of new carparks under the facilities management business; and its logistics services business. Earnings for the period were $2.1 million, 80.9% higher than the previous year.

In its FY2018 annual report, LHN said: “As housing gets more expensive and smaller, the co-living space concept becomes an attractive accommodation option in Singapore. To tap the growing popularity of the co-living space business, we obtained approval from the Singapore Land Authority (SLA) in March 2018 to convert part of our Raeburn Park property to set up our first co-living and co-working space, which commenced operations in October 2018.”

Says JLL’s Tay: “There is potential for growth, given the more than 1.6 million foreign population in Singapore (including permanent residents but excluding construction and foreign domestic workers). Success in the co-living sector will be built upon co-living operators’ ability to change the way people live by plugging inefficiencies in traditional housing models.”

JLL’s survey also found that locals are increasingly interested in co-living spaces, with a growing number of millennials with the financial means seeking more independence. Another group of more mature working professionals who are married but without children is also warming up to the idea of co-living as a new lifestyle.

RHB analyst Vijay Natarajan is more circumspect about the trend’s longevity. He tells The Edge Singapore, “Some of the limiting factors include minimum stay commitments, tightening immigration policies, falling rental market and less generous expat packages.”