The co-living sector in Singapore shows resilience post-pandemic, with operators sporting sustainable business models while actively eyeing new growth opportunities in Southeast Asia. (Picture: Bespoke Habitat)
This year, the co-living market rode the wave of a transformation in Singapore’s rental accommodation landscape. The government has cautiously broadened the spectrum of accessible long-term housing choices, responding to a market finding a new balance after experiencing a 30% rental surge in 2022.
The sector in Singapore has proven resilient post-pandemic, with operators establishing sustainable business models and actively pursuing new growth opportunities in Southeast Asia.
The market’s maturation has raised the expectations of local and expatriate renters, who now seek more than just a room with four walls, demanding higher-quality and tailored long-term living solutions.
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Eugene Lim, founder and CEO of The Assembly Place, reflects on the change in attitudes. “Four years ago, when the co-living market in Singapore was in its nascent stage, most tenants had the impression that co-living is no different from typical room rentals. However, the market has evolved tremendously, especially over the past two years, and tenant expectations of co-living products are much higher”.
The co-living market has seen tremendous evolution over the past two years and tenant expectations are higher than ever, says Lim. (Picture: Samuel Isaac Chua/The Edge Singapore)
Similarly, Luca Bregoli, co-founder and COO of co-living operator Cove notes that the inclination toward larger-sized rooms has shifted to more economical preferences due to rising rental prices while maintaining a tight housing budget. He says: “This year, more people can and will accept a smaller space because, for now, it’s a more palatable alternative than paying higher rents… in this rental market, the economics are such that operators need to be able to optimise space.”
“It is straightforward enough to provide the hardware — a nice room with good furnishings and a good location. That’s just about spending money to spruce up a space,” says Lim, adding that the enduring attractiveness of a quality co-living product that people are increasingly prepared to pay premiums for is a sense of community.
Young professional expats moving to Singapore for the first time might choose co-living accommodations initially to facilitate integration into the local community and establish social connections, says Lim.
With The Assembly Place, many operator-organised community events, such as hikes, workshops and yoga sessions, are fully booked within an hour of posting. “This type of programming is very important and is what most co-living tenants have come to expect,” says Lim.
At least 65% of the tenants lodging with The Assembly Place are under 35 years old, and of this group, nearly 60% are in Singapore for post-graduate studies.
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Consisting of four 2-storey shophouses at 31, 33, 35, and 37 Kinta Road, the 26-room property marks Cove’s newest addition in Singapore. (Picture: Samuel Isaac Chua/The Edge Singapore)
A few key players dominate the majority of Singapore’s co-living market, managing over 50% of all properties in this sector. According to a June market report by JLL, Coliwoo — under property management firm LHN — holds the top position with a 20% market share.
Over the past three years, Coliwoo has moved quickly to stake its pole position in the co-living market. Its first Coliwoo branded property was a four-storey residential and commercial building in Balestier in 2020.
The company opened its 14th property, a four-storey residential property in River Valley, in August this year. And its latest launch is Coliwoo Hotel Pasir Panjang, a four-storey establishment at 404 Pasir Panjang Road. This brings Coliwoo's portfolio in Singapore to 15 properties, and it has more than 1,680 rooms under its management across properties with master leases or joint ventures.
At the time of the JLL report, The Assembly Place secured the second position with a 16% market share. The company has been actively growing and is expected to close the year managing around 2,000 rooms. In October, it launched a high-end student housing venture at Lorong J Telok Kurau and its inaugural serviced apartment, YMCA @ Stevens, with 46 rooms, commenced operations in March.
The Assembly Place entered the student housing market, unveiling a 426-bed Campus at Telok Kurau in October. (Picture: Samuel Isaac Chua/The Edge Singapore)
Among the top five operators are homegrown brands Bespoke Habitat, lyf by Ascott and Habyt, formerly known as Hmlet. The upcoming year could see Habyt attempt to significantly scale up under the reins of its new Asia Pacific CEO, Jonathan Wong.
In 2022, Hmlet merged with European co-living operator Habyt. Until July, Hmlet retained its corporate identity, and a rebranding initiative marked Wong’s appointment to his current position. “Coming into this role at Habyt, my focus is to help grow the business in this region,” he says.
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“The fundamentals for co-living and flexible living are extremely strong in Singapore and the wider region. Looking to 2024, some macro-trends supporting this demand are the rising cost of housing affordability, the trade-off between living close to the workplace and rental costs, and a desire for social connection and community.”
Habyt will focus on its two key propositions — to offer affordable housing and plant themselves in areas most accessible to its members, says Wong. (Picture: Samuel Isaac Chua/The Edge Singapore)
With most established co-living operators in Singapore settling into a niche for themselves, Wong says Habyt will focus on its two key propositions — offering affordable housing and planting itself in areas most accessible to its members. “It isn’t always intended to be a five-star experience or a luxury product, but we want to offer an alternative available to as many people as possible”.
Rent will be a significant concern for many long-term accommodation users in Singapore in the coming year. A recent market research from Huttons Asia forecasts that private residential rents are expected to rise by 10% this year, following a 30% surge in 2022. Additionally, HDB rents may increase by 12% this year, with a further 8% projected for 2024.
Despite the double-digit rent growth this year, the rental market has largely moderated over the past 12 months due to a lower influx of new employment pass holders and more than 18,000 new private homes completed this year. Some landlords feel the heat from squeezed rents and high mortgage payments, a reversal of the ‘take it or leave it’ situation in 2022, says Lee Sze Teck, senior director of data analytics at Huttons Asia.
“The influx of new private residential units has softened the stance of local landlords, and most are happy to lower their rental expectations. They also see it as a boon for their properties to be managed by a co-living operator,” adds Ernee Ong, co-founder of Bespoke Habitat. Most landlords they partner with are retail investors with a handful of condo units or low-density apartment blocks.
The influx of new private residential units has softened the stance of local landlords and most lowered their rental expectations this year, says Ong. (Picture: Bespoke Habitat)
The government has also taken a more proactive approach this year to expand the range and supply of short-term and long-term housing needs. This year, the Singapore Land Authority (SLA) launched the public tender of two sites — a heritage property at 79-95 Hindoo Road and a state-owned property at 26 Evans Road.
It was the first time SLA encouraged bidders to submit co-living concepts for consideration. The Hindoo Road property was awarded to a joint venture comprising operator Cove and construction and development company Eco-Energy. Meanwhile, construction company Samwoh Corp submitted the highest bid rent of $319,000/month for the property at Evans Road. According to SLA, the result of the tender for 26 Evans Road will be announced on Jan 9.
SLA has indicated that it plans to release more properties next year to meet the growing real estate needs of co-living operators in Singapore. Separately, the Ministry of National Development unveiled a new typology of long-stay rental apartments called Serviced Apartments II (SA2). It is intended as a long-stay rental accommodation of at least three months.
Two sites on the 2H2023 Government Land Sales (GLS) programme were earmarked for this pilot — Upper Thomson Road (Parcel A) and Zion Road (Parcel A). A third site was announced under the Confirmed List of the 1H2024 GLs programme, located at Media Circle in one-north.
The increased adoption of hybrid work in Singapore this year is changing the location preferences of most professionals who opt for flexible housing options like co-living, says Wong. “We used to be very CBD focused, but we’ve begun moving aggressively into suburban locations like Joo Chiat, Serangoon, Bukit Merah and Bukit Timah because that’s where we expect new demand to stem from”.
Cove’s Bregoli also agrees and adds that tenants have been more willing to commute to work, trading proximity to the city centre for more affordable rents in the city fringe and suburbs. “With most professionals heading back to the office for just two or three days a week, they have a higher tolerance for commuting.”
This year, more people are willing to accept smaller spaces as a more digestible alternative to paying higher rents, says Bregoli. (Picture: Samuel Isaac Chua/The Edge Singapore)
Founded in 2019, Bespoke Habitat is among the most locationally diverse co-living operators with properties in Tiong Bahru, Queenstown, Tanah Merah and Jurong West. Catering predominantly to executive-level foreigners (97%), the remaining tenant base includes students.
Bespoke Habitat’s Ong says that this year, many of its Malaysian tenants have felt that living in Singapore is increasingly unaffordable due to the surge in the value of the Singapore dollar relative to the Malaysian ringgit and have moved to Johor. In addition, the rise in remote working opportunities has resulted in some of its tenants taking shorter three- to six-month leases in Singapore, compared to traditionally longer-term leases of a year or more.
As competition ramps up in the co-living sector, the barrier to entry for new operators is getting higher and higher. This is because most new co-living tenants typically prefer the certainty and security of lodging with an operator with a significant scale and footprint in various neighbourhoods, says Lim. “Operator reputation is critical in attracting and retaining co-living tenants. Without scale and the ability to offer a wider range of locations and room types, it is increasingly difficult for new players to break into the market today.”
Ong shares this sentiment, and the start-up has grown its portfolio in the city-state on the strength of its reputation so far. “Property owners believe that if their asset proposition is in line with (Bespoke Habitat), they are more willing to partner and work with us to manage their assets,” he adds.
It is not only co-living operators facing increased challenges — Wong highlights various barriers that deter many from embracing flexible housing or co-living options. In response, Habyt recently revealed an exclusive partnership with local start-up Rently to offer deposit-free rentals on its properties in Singapore and Hong Kong.
Owen House, located at Owen Road in Farrer Park, is a 106-room hotel representing Habyt’s first venture into the Singapore hospitality market. (Picture: Samuel Isaac Chua/The Edge Singapore)
“Our long-term plan is to deepen our presence in our core Southeast Asian markets, Singapore and Hong Kong. We want to have more scale in these markets to have a larger portfolio for our member base,” says Wong.
There are plans to break into new markets such as Korea, Taiwan and Australia. “The way we get into these markets can range from outright acquisitions, strategic partnerships, or joint ventures with the right partners”.
Wong says Bespoke Habitat has plans to incorporate new business ventures under its brand. The company already hires on-site cleaners, air-con technicians, on-call handymen and dedicated teams covering renovations and procurement. “Today, we aren’t just a property management company. We also serve facilities management for the properties we manage,” he continues, adding that the company will explore venturing into the co-working space soon.
Bregoli expects rental and co-living housing supply to reach a good equilibrium next year. He says: “It has been easier to do deals with landlords and asset owners this quarter… We could see overall rents in the co-living sector slip slightly next year as more housing supply enters the market.”