The living room of the four-bedroom, duplex penthouse at The Lumos which was recently furnished by Login Apartment as a co-living unit (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Co-working took off when it proved to be an attractive solution for landlords of commercial buildings who had struggled to fill up vacant office space several years ago. Whether co-living could be a solution for a residential market saddled with a pipeline of 32,000 unsold units remains to be seen.
Since 2018, property developers have been hit by even more prohibitive cooling measures, namely, a hike in additional buyer’s stamp duty (ABSD) to 25% for land purchases. The ABSD is remissible if the development is completed and all the units sold within five years of acquiring the land. There is also an additional 5% ABSD that has to be paid upfront, and that amount is non-remissible.
Owing to government regulations, the priority of property developers is to sell their residential units, says Calvin Cai, country head of co-living operator Login Apartment in Singapore.
However, for property developers who are holding unsold inventory in completed developments, or for investors with a portfolio of multiple units, co-living could be an attractive solution.
Exterior of the 53-unit The Lumos, which was originally developed by Koh Brothers Group and Heeton Holdings (Photo: Koh Brothers Group)
Login, for example, has taken possession of 15 apartments at The Lumos on Leonie Hill since November. Some of the units, including a 5,714 sq ft, duplex penthouse, have already been fully furnished with Scandinavian-style furniture, and paintings by Singapore-based architect-turned-artist, Jau Goh. An open house was held to showcase these units on Dec 6. The others are also in the midst of being furnished.
For Login, the 15 units translate to about 50 co-living rooms. “Co-living adds value to such property developers and owners as they can offer units for sale with tenants in place,” says Cai. “Co-living brings up the value of a property.”
Residential units with co-living in place will prove attractive to investors looking for capital appreciation in the medium term, says Ken Low, managing partner of SRI. “Co-living gives these homeowners greater stability in terms of rental income as the responsibility of leasing the unit is passed on to the co-living operator,” he adds.
The 15 units operated by Login for co-living are part of a portfolio of 34 unsold units at The Lumos, owned by a private equity real estate group. The Singapore-based group had acquired the shares of the entity that owned the units back in March 2017, on the eve of the introduction of the additional conveyance duties (ACD) for residential transactions involving transfer of shares in entities holding property.
The entity holding the unsold units is Buildhome. It is a company set up jointly by Singapore-listed property developers, Koh Brothers Group and Heeeton Holdings, where each held equal stakes. Buildhome developed the 53-unit luxury condo, The Lumos. Launched in late 2007, The Lumos was completed in 2011.
View of Orchard Road from the master bedroom of the duplex penthouse at The Lumos (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Foremost, the owner of the portfolio of remaining units at The Lumos wants to sell them, including those that are operated by Login Apartment as co-living units, says SRI’s Low, the marketing agent.
Prices for the freehold units at The Lumos will start from $2,281 psf, a mark-down of 26% from the launch price back in late 2007, which ranged from $3,074 psf to a high of $3,984 psf, according to caveats lodged with URA Realis then.
At The Lumos, units operated by Login range from a one-bedroom unit of 699 sq ft, to three-bedroom units of 1,754 sq ft, four-bedroom units of 2,432 sq ft and four-bedroom duplexes of 3,3,03 sq ft. There is even a 5,714 sq ft, duplex penthouse with four en suite bedrooms and a roof terrace with private swimming pool.
The duplex penthouse on the 35th floor of The Lumos comes with full-height glass windows and sliding doors, and wraparound balconies offering views of the Orchard Road prime shopping strip. The four bedrooms include a master suite which comes with an en suite study, walk-in wardrobe and en suite master bathroom as well as a junior master bedroom. The kitchen is fully equipped with top-end German brand, Gaggenau appliances. Adjoining the kitchen is a utility area with a helper’s room and bathroom. On the 36th floor is the roof terrace with a private swimming pool.
The duplex penthouse will be available for lease at $18,000 a month, says Cai. The preference is to rent out the penthouse and the larger units in their entirety, he adds. “This is because the owner ultimately wants to sell them.”
For the other apartments at The Lumos that are managed by Login, common bedrooms will be available for rent at prices ranging from $2,200 to $2,800 per month, depending on room size. Cai is hoping to secure the remaining 19 units held by the private equity investor at The Lumos in order to convert them into co-living spaces too.
Login Apartment is managing six of the 23 apartments at Delfi Orchard as 11 co-living rooms, which were taken up within 45 days (Photo: The Edge Singapore)
In July this year, Login secured six apartments at Delfi Orchard, which is a mixed-use development with 23 apartments sitting on top of a shopping mall along Orchard Road. Developed by City Developments Ltd (CDL), Delfi Orchard is a freehold development completed in 1985.
The units at Delfi Orchard that are managed under Login’s co-living platform are in partnership with CDL, which became a strategic investor of the online apartment rental portal, Mamahome, in 2016 when it invested $20 million for a 20% stake. Mamahome was co-founded by ChongFu Investment and E-House Capital China.
A CDL spokesperson says: “We continue to explore collaborative opportunities with Login Apartment, should there be suitable units that can be converted into co-living space.”
Of the apartments at Delfi Orchard managed by Login, one is a one-bedder, and the remaining five units are two-bedders. The 11 fully-furnished co-living rooms were fully taken up within 45 days, says Kemmy Sim, Login head of operations.
Login Apartment was launched in Singapore in March 2018 as Mamahome before changing its name to the former in July that year. Besides Login Apartment, there are two other serviced apartment brands under ChongFu Investment, namely Locca and Suisse Place. Of the two remaining brands, Cai sees opportunity for Suisse Place in Singapore as it is hospitality-based and positioned as a “hotel-apartment”.
From just two units at Alex Residences in early 2018, Login grew to 59 rooms and will end the year with 109 in Singapore. It now has a presence in the Orchard Road neighbourhood, Queenstown, Novena and East Coast.
According to Cai, Login has an average occupancy rate of 95% for its rooms. “Our goal is to grow to 900 rooms by the end of 2021 and expand regionally thereafter – with plans for the Australian and Japanese markets already underway,” he adds.
Cai: Co-living is really about joining a community that enjoys sharing living spaces and engaging in communal activities which can range from yoga, painting to wine appreciation (Photo: Samuel Isaac Chua/EdgeProp Singapore)
In 2020, Cai wants to focus on “creating value” for Login’s co-living members, besides the fully furnished units, Wifi, utilities and weekly housekeeping services which are offered as a package. “We are trying to collaborate with partners and vendors, for instance Grab or Redmart, where they can get vouchers or be entitled to a special promotional code when they place their orders,” he says.
Co-living appeals to millennials in the 22 to 37 age group. In Singapore, 99% of the co-living members are expatriates. “We have only one Singaporean, and she’s an influencer for sports and yoga,” says Cai.
By market share in terms of brand recognition, Cai reckons Login is ranked among the top three co-living operators; and is among the top five in terms of room count. “Co-living is really about joining a community which enjoy sharing living spaces and engaging in communal activities which can range from yoga and painting to wine appreciation,” he adds.
There are about 20 co-living operators in Singapore today, and they include Commontown of South Korea, Cove Living, ST Residences and ST Signature (part of the hospitality arm of F&B player Katrina Group), as well as the biggest player by market share and number of rooms today, Hmlet.
Eyo: Even though there’s a projected oversupply in the residential market, the challenge for co-living operators is in finding new stock as developers want to sell their units, not lease them out (Photo: Samuel Isaac Chua/EdgeProp Singapore)
“Even though there’s a projected oversupply in the residential market, the challenge for co-living operators is in finding new stock as developers want to sell their units, not lease them out,” says Samuel Eyo, managing director of Lighthouse Property Consultants, who brokered the five-year master lease agreement between Login and Buildhome.
Eyo had also brokered the management of 43 units by Hmlet at Lumiere, just off Shenton Way, in March this year. The 43 units span the 34th to 45th storeys of the 168-unit Lumiere residential tower, which was developed by BS Capital and completed in 2010.
“The lines in the co-living space are blurring,” says Eyo. “There are hybrid players like CapitaLand’s Lyf at Funan which are serviced residences but because they also have a hotel licence, the rooms can be rented out on a daily basis. As a serviced apartment, the minimum stay is seven days. They can also sign long-term leases. Hence, they have flexibility.”
For pure co-living operators like Login, which are considered to be in the residential space, the minimum lease period under the URA guidelines is three months. Still, Cai is intent on focusing on the residential space.
Co-living needs to be in locations that attract millennial expatriates. That's why city centres and city fringe locations work best, says Cai (Photo: Koh Brothers Group)
Another challenge for co-living operators is in finding the right location.
“Delfi Orchard was a good testbed for us,” says Cai. “It was an old property having been completed in 1985 and therefore, has no facilities. Yet, we were able to rent it out in 45 days. That gave us an indication of the strength of the demand in Orchard Road. But to find the right property on Orchard Road is the challenge.”
Besides location, convenience is also important, namely, proximity to amenities such as public transport, shopping, entertainment and F&B outlets. That is why city and city-fringe locations work best, says Cai.
This is partly because co-living needs to be in locations that attract millennial expatriates, says Eyo.
While there are about 20 co-living operators in the Singapore market today, Cai reckons that the market can realistically support “perhaps three to five players, or even fewer”.
This is because the capital expenditure for co-living operators is relatively high, explains Eyo. He estimates that just furnishing a one-bedroom apartment costs about $5,000 to $7,000.
The furniture and furnishings have to be depreciated over time, and hence, the co-living operator has to sign a longer master lease of five years in order to breakeven operationally and be profitable. “If you just want to gain market share by signing a master lease of just one to two years, it’s very hard to make money,” adds Cai.
“Truth be told, WeWork was a wake-up call for all those who were competing based on market share, especially in Singapore,” cautions Cai. “Some of the smaller co-living operators have already failed. Next year, we expect to see some consolidation in the co-living sector.”
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