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Nikkei Markets

CapitaLand targets millennials, deepens co-living foray

Flexible leases, shared activities underpin draw of such housing

Four months after launching its first co-living space called "lyf" in Singapore, CapitaLand's Ascott Group, the developer's serviced residence arm, is planning another seven such properties. (Photo by Nozomu Ogawa)

SINGAPORE (Nikkei Markets) -- Southeast Asia's largest developer is expanding its plans for co-living spaces, anticipating greater demand from millennials for affordable accommodation that also offers flexible terms and a sense of community.

Just four months after launching its first co-living space called "lyf" in Singapore, CapitaLand's Ascott Group, the developer's serviced residence arm, is planning another seven such properties.

Over the next three years, the lyf brand will include two more properties in Singapore as well as one each in Bangkok, Kuala Lumpur, Cebu, Fukuoka and Shanghai, Mindy Teo, Ascott's deputy managing director, said.

Ascott's goal is for lyf to account for around 10% of the company's overall portfolio in the medium term, Teo told Nikkei Markets. Ascott currently manages around 70,000 rooms globally under various brands and has an additional 46,000 or so units under development.

Co-living, which has come to mean tiny, chic rooms in a larger managed space with communal facilities, is aimed at young, single professionals seeking an alternative to shared apartments and the chance to interact socially with like-minded people.

Co-living has its naysayers. Some compare it to the co-working trend, which was rocked by the implosion of WeWork and is still evolving as a business model. Others describe it as an upscale version of dormitory housing for Instagram enthusiasts that is unlikely to graduate from its niche status in the real-estate market.

Jorge Gonzalez, a Spanish expatriate working at an IT company in Singapore who has shared apartments in Dublin and London, said the dynamics of getting various individuals to live together are complex and companies will need mechanisms to match prospective tenants as well as to remove those who are disruptive.

Most operators of co-living spaces are start-ups. In Singapore, companies such as Hmlet and Cove offer monthly rentals in various parts of the island. Foreign companies are also entering the scene. Early this month, Hong Kong's Dash Living expanded into Singapore by acquiring Singapore-based Easycity.

Investors in Singapore-based Hmlet, which was launched in 2016, include Sequoia India and Mitsubishi Estate. Hmlet is already in Tokyo, Hong Kong and Sydney and plans to add Osaka and Melbourne to its list of cities.

There is some concern about the rapid pace of expansion. But Christine Li, head of research for Southeast Asia at Cushman & Wakefield, said the industry needs to operate on a regional or even a global basis in order to appeal to millennials, who are a lot more mobile geographically.

Hmlet said there is already strong demand for co-living spaces and the challenge is to find suitable residential developments.

Ascott's Teo expects demand to pick up as more millennials enter the workforce. Other supporting factors include rising home prices and the trend to start families later in life, said property services firm CBRE.

To achieve economies of scale, a typical lyf property will have at least 100 en-suite rooms. Many will feature small work spaces.

Lyf Funan, which opened in September, is located within Singapore's central business district and has 412 rooms across 279 apartments. Ascott describes it as the largest co-living property in Southeast Asia. Room sizes vary, from 18-square-meter studios to 70- square-meter four-bedroom apartments.

The social or shared spaces in the property include a large communal kitchen, a laundromat, a gym and space for talks and workshops. Staff organize various activities including cooking classes, most of which are held on weekends.

Teo said that lyf will offer stays for as short as a night. This would differentiate it from most other co-living space providers, which lease rooms for at least a month or longer.

At lyf Funan, rates start from 150 Singapore dollars ($111.3) a night, or S$3,060 a month, before taxes.

In general, rents at lyf properties will be lower than at Ascott's serviced residences due to the smaller rooms and the lower staff-to-room ratio, Teo said.

Hmlet's website, which classifies its Singapore rooms as pocket, regular, master, and so on, has rates starting from S$1,200 per month in the prime Orchard Road area.

--Kevin Lim

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