The co-living market in Singapore saw unprecedented activity over the past 12 months with millions of dollars of funds being pumped into operators, enabling them to embark on an expansion spree. Investors’ optimism in the market raises the question if the time for co-living has finally arrived.
Looking back, the co-living journey in Singapore has not been smooth sailing. Early entrants to the market, such as 13 and Techsquat, opened with much fanfare in 2014/2015 but were largely defunct within a year of operation after having to battle financial, regulatory and cultural challenges.
The hype in the co-living market was revived in recent months after it gained recognition as a convenient, community-driven and affordable solution for expatriates who are looking for a fun and fuss-free accommodation option. Co-living addresses millennial expatriates’ housing needs by offering them a private space in a shared apartment with plenty of common areas for community activity. With the help of technology, operators are able to bring like-minded individuals together. Community managers stationed in the cluster also organise regular social or work-related events to facilitate interactions among members.
New players who are looking for a share in the market include Singapore-based start-up Hmlet, Shanghai-based start-up Mamahome, and lyf, a new brand of living targeted at the millennials by The Ascott Limited. Their growth was aided by the government’s move to lower the minimum rental period for private homes from six to three months in June 2017, making it more viable for co-living operators to target members who want flexibility in their housing options.
Co-living could address the needs of younger expatriates
In Singapore, co-living space primarily appeals to millennial expatriates. Demand was boosted by the rising number of single-household expats engaged on a contract basis or working on project assignments. The one-stop services offered by co-living operators provide expatriates with an alternative accommodation option that is simpler than renting a conventional room and cheaper than renting a serviced apartment or hotel. In the same light, some academics and students on exchanges with local universities also turn to co-living as a bridging accommodation option while they are here.
Barriers still exist among locals
There is a more limited market among the locals due to Singapore’s small city footprint and high homeownership rate. The high cost of living and the culture of being provided for at home also mean that young millennials are less inclined to move out when they grow up as they cannot afford the rents and are reluctant to leave the comfort of their homes.
Conclusion
Although the concept of co-living is gaining traction in Singapore, the bulk of the customer base, in the short term, will likely still be from the young expatriates who currently only form a minority group in Singapore. While co-living is gaining popularity as a housing option among the millennials, the issue of financial constraint will always be on their minds. It will be interesting to see if more local millennials will take a bite at this housing concept after they grow up and gain spending power.
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