Co-living operator Hmlet debuts its first hotel property
By Timothy Tay
/ EdgeProp Singapore |
The design inspiration of the hotel is a modern interpretation of the Art Deco style shophouses on nearby Rangoon Road and Kitchener Road. (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Homegrown co-living operator Hmlet has launched its maiden hotel property — Owen House by Hmlet, a 106-room hotel at 2 Owen Road in Farrer Park. This is the first hospitality property by Hmlet, and it will be managed under its own brand name and management team.
“As Hmlet expanded its range of residential offerings over the years, the company has matured and developed the operational capacity, as well as in-house design knowledge, where we are able to break into the hospitality segment,” says Joshua Li, Hmlet’s chief real estate officer.
“Hotels are a natural progression for us in terms of being able to offer more accommodation options, which is the company’s value proposition,” says Li. He adds that the company was eyeing the chance to open and manage a hotel property under its own brand for some time, although the Covid pandemic delayed its plan.
Thus, when the chance came last year for Hmlet to partner TCRE Partners and JMD Group for the hotel building at 2 Owen Road, it was an opportunity that Hmlet did not want to miss, says Giselle Makarachvili, CEO of Hmlet.
From left: Giselle Makarachvili, CEO of Hmlet, and Joshua Li, Hmlet’s chief real estate officer. (Picture: Samuel Isaac Chua/The Edge Singapore)
The freehold hotel property is the former Fortuna Hotel which was sold for $85.8 million in April 2022. It was bought by an entity that is equally owned by JMD Group and TCRE Partners. The partnership with Hmlet was publicly announced in November last year.
It is an opportune time to launch Owen House by Hmlet to capitalise on the recovery in business and leisure travel to Singapore, says Makarachvili.
Other ongoing market trends such as soaring residential rents and the limited availability of shorter-term accommodation options in Singapore also support the opening of a hotel property and will likely be a boost to Hmlet’s line-up of accommodation options, says Li.
Modern Art Deco inspiration
The aesthetics of Owen House are meant to be fun and light, and veers away from looking ostentatious and modernist that would be too out of place within the neighbourhood, says Li. “The design inspiration of this hotel is a modern interpretation of Art Deco and the Art Deco-style shophouses along the nearby Rangoon Road and Kitchener Road,” he says.
For example, a recurring element throughout the hotel and within each room are the presence of arches. This is supposed to reflect the architectural style of the Art Deco-designed shophouses. On the ground floor, the lobby features a textured concrete floor, and the space is highlighted by bold and black metallic outlines.
The new 106-room hotel, Owen House by Hmlet, is located on Owen Road in Farrer Park. (Picture: Samuel Isaac Chua/The Edge Singapore)
The lobby is an important focal point of the hotel and Hmlet has envisioned it as a common space accessible to the public. Its attractiveness is boosted by an island bar called Sunlight and Moonshine that is operated by the hotel. The bar serves grab-and-go specialty coffee during the day, and transforms into a 1920s-inspired cocktail bar in the evening.
Li attributes the design vision to the in-house design team at Hmlet, a capability that not many other flexible-living operators in Singapore have. “The design team really cares about the brand standards throughout all our properties. Each interior is customised for the Hmlet brand and expressed differently in each of our locations,” he says.
Owen House offers seven different room types which consist of one- and two-bedroom units of various sizes. The smallest are the one-bedroom deluxe Queen rooms of 189 to 275 sq ft, followed by studios with a fully equipped kitchenette that range from 243 to 270 sq ft.
Larger hotel rooms for up to four people include the two-bedroom deluxe and two-bedroom suites that range from 450 to 564 sq ft. The hotel also offers a family room with a balcony that is 407 sq ft, and several Owen Suites that come with a kitchenette and dining area for longer-term stays. These suites range from 374 to 439 sq ft.
Full range of accommodation options
“Before Owen House, we knew there was a gap in our product line-up for short-term stays, especially for travellers who want to stay for fewer than six nights,” says Makarachvili. She adds that typical leisure and business travellers to Singapore stay here for an average of three or four nights, using the city as a hub to visit other destinations in Southeast Asia.
Owen House offers seven room types with a mix of one- and two-bedroom units. Pictured is a family room with a balcony on the third floor. (Picture: Samuel Isaac Chua/The Edge Singapore)
“The aim of our business model is to target all types of residential accommodation demographics,” she says. Thus, Hmlet differentiates itself by touting its wide range of flexible accommodation options.
For example, its Hmlet Homes portfolio offers the typical co-living arrangement, pairing individual tenants, and comprises shared apartments. This has been popular among students and single working professionals. This usually sees tenants rent a room for nine to 12 months.
Hmlet expanded its product offering in 2021 with a turnkey private housing called Hmlet Nest, targeting locals and expatriate couples and families. This was rolled out in response to a growing market demand for flexible-living arrangements in Singapore, and families usually lease a space for more than a year.
Finally, its Boutique Collection comprises the 145-room Hmlet Cantonment and the 106-room Owen House hotel. Hmlet Cantonment is the operator’s largest single co-living property in its entire portfolio so far and was launched in 2019. Typical bookings at Hmlet Cantonment last less than six months, and the property offers one-bedroom units of 118 to 280 sq ft, and two-bedroom units of 280 to 441 sq ft.
With the opening of Owen House, Hmlet has a full range of accommodation options of very short-term stays for travellers and tourists, private residential leasing for families and couples, as well as long-term co-living options for corporates and individuals.
A queen-bed junior suite room at Owen House. (Picture: Samuel Isaac Chua/The Edge Singapore)
“We did not look at targeting only millennial occupiers; instead we really want to cater to a broad range of target audiences from corporate tenants and working professionals to families. And Owen House helps us to tick the box for those short-term stays that we were missing,” says Makarachvili.
“The main goal is not to lose the client, so that when someone signs a new lease or books a room with us, and they want to stay longer in Singapore, we have a product offering that suits their needs,” she says.
70% lease renewals in 2022
According to Makarachvili, 2022 was the best year on record that the flexible living operator has had in Singapore. The combination of a tight private rental supply and rapidly climbing rents translated into a very high rate of lease renewals and enquiries.
She says that close to 70% of their tenants whose leases were up for renewal last year opted to renew their leases with Hmlet. “The rest who didn’t renew with us consisted of groups and individuals leaving the country.”
She adds that there were very few who had left a Hmlet property to take up a direct rental agreement with a landlord.
In general, the surge in private residential rents in recent months helped to cast co-living and flexible living properties in a more affordable and favourable light to some renters, says Li.
For the whole of 2022, rental prices for private properties in Singapore increased by 29.7% y-o-y. It was the highest annual increase since 2007 when rents skyrocketed 41.2% y-o-y at the time.
“Co-living is a more attractive option especially with the lease flexibility. Coupled with the uncertainty in the macroeconomic environment this year, we are an even better fit for those seeking housing,” says Li.
“The design team really cares about the brand standards throughout all our properties. Each interior is customised for the Hmlet brand and expressed differently in each of our locations,” says Li. (Picture: Samuel Isaac Chua/The Edge Singapore)
As an established co-living operator in Singapore, Hmlet has grown in tandem with the local co-living and flexible-living segment in Singapore. Li recounts that in 2018 when Hmlet concluded its Series-A funding as a start-up, most of its willing investors were family offices and entrepreneurial high-net-worth individuals.
“Today, the co-living market sees institutional capital pouring into the market, as well as very established family offices and investment funds,” he says. “Hmlet is constantly engaging with institutional funds in Singapore, Hong Kong, and other markets.”
Moreover, he says that the segment has gone some ways to prove its resilience through a crisis, as the local co-living market in Singapore has weathered the Covid-19 pandemic well. “Post pandemic, co-living assets are showing that their overall yield is very resilient. Plus, for Hmlet, we’ve shown that we can tap into that short-term segment and offer full operational support,” says Li.
Makarachvili adds that the trust consumers and investors have in Hmlet has also grown in leaps and bounds. “We have shown our strong market position and organisational ability to run and manage entire buildings,” she says.
She adds that most people looking for short- and long-term accommodation in Singapore, as well as asset owners and landlords, understand that co-living is more than affordable housing for the millennial demographic. “As a result, we have received enquiries from a wide age range, professional background, individuals and corporate bookings,” she notes.
Merger with Habyt
However, some structural shake-ups hit the homegrown Hmlet last year. The most significant change was its merger with European co-living player Habyt Group in April 2022. The merger saw Hmlet become part of the group, joining the global portfolio of more than 8,000 co-living and flexible living units spread across 10 countries and 20 cities.
As a result, Makarachvili also holds the position of head of Asia Pacific (Apac) at Habyt, while Li takes on the role of Habyt’s head of expansion, Apac. They both report to Lucca Bovone, founder and CEO of Habyt.
The view from the one of the hotel rooms at Owen House, at Centrium Square and Serangoon Road. (Picture: Samuel Isaac Chua/The Edge Singapore)
Between 2020 and 2021, Hmlet suffered a number of setbacks, starting in November 2020 when it reportedly terminated a five-year master lease to manage and lease out 43 units at Lumiere in Tanjong Pagar. In June 2021, Australian co-living operator took over one of its properties in Sydney, Hmlet St Peters. At the time, Australian media reported that Hmlet had exited the Australian market with about A$500,000 in unpaid debts.
According to Makarachvili, the merger with Habyt was all about supporting Hmlet’s upcoming regional expansion plans and leveraging a global network to support its growth.
“We leverage on the synergies (as part of the Habyt Group) and benefit from lead generation, exposure, larger market presence, and the confidence of our members,” she says. “We want to be part of a group that has a global presence. This is an important aspect for any expanding co-living operator.”
Li says that the company is taking an opportunistic approach towards its future expansion in Asia and is on the lookout for local real estate partners to help them unlock available properties.
Hmlet currently has co-living apartments in 23 properties in Hong Kong, as well as co-living apartments in Tokyo, Japan. The operator is scheduled to open co-living apartments in at least six more Tokyo residential buildings by the end of this year.
Looking ahead, Makarachvili says that the Kuala Lumpur residential market is one where the company hopes to grow rapidly over the next few years. It has all the attributes of an attractive gateway city, with opportunities for affordable co-living housing to sprout and thrive given the relatively high rental prices, she adds.
According to Li and Makarachvili, they are keeping a watchful eye on rising interest rates that will pull up financing costs, as well as rising construction costs that could hamper short-term expansionary plans this year. However, they are also encouraged by the rebound in the local hospitality market and expect Owen House to see high and consistent occupancy in the coming months.
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