The co-living concept took off about a decade ago; it started with a shift in short-term stays in people’s homes and experiences with Airbnb to now hassle-free apartment sharing by merging community-living with a space to live, work and play.
For property owners, co-living has huge market potential. In Singapore, within the first half of 2021, the city-state saw nearly US$24 billion worth of real estate sales as home prices spiked by a record 4.1 per cent.
There is currently an untapped demand for units, which creates a huge opportunity for property owners who want to increase their occupancy rates and be part of the co-living wave.
The surging property market also adds to the cost of living in Singapore, reaching a seven-year high where people may decide on communal living favouring the co-living concept instead of single accommodation.
To date, the co-living concept has received a 98 per cent occupancy rate with tenants that play their part in being good stewards of their new home. However, some have reservations about handing over keys to co-living operators.
The biggest myth and fear
Many owners fear and doubt how co-living operators are and feel they are not professional enough to take up properties. The fake listings and horror stories of people renting from their owner and subletting it to vice operations breeds misconceptions.
Property owners believe that co-living operators adopt the same model as real-estate companies. Still, there’s a difference in the way they offer their services and use of technology.
With work and academic goals changing today towards more flexibility and mobility, at least 125 property owners see the value in how a co-living solution company that uses tech-driven expertise is useful as a long term rental solution by providing a range of facilities at an affordable cost.
Co-living operators are going above and beyond to provide convenience and set the foundation for more shared experiences with a single app to manage their tenants. Information is a top priority as, within the app, homeowners can track if their tenants have valid passes, including a rental collection feature.
Also Read: Casa Mia, a Singapore coliving startup’s success story
On service and maintenance, any instances such as rectification of water heater or moving out services are all addressed through the app. This allows co-living operators to increase their service-level agreement toward tenants, upping how properties are managed.
Transparency through data embedded with AI functionalities such as tenants’ stay periods or who may leave will also provide better opportunities to retain tenants in the long run.
With mobile phones becoming all-important devices in everyone’s lives, co-living operators are emphasising the smart use of mobile apps to make the lives of property owners and residents easier. This creates seamless communication between both parties to provide instant assistance whenever required.
Co-living could be the right investment, and here’s why:
- Consider your target tenant profile
Millennials are the biggest audience for co-living spaces. Young, independent, and armed with rising disposable incomes, they are open to sharing apartments and communal spaces with other people. To find a suitable residential space for millennials, all is needed is a location that makes it easy for them to live, work and play.
- Maximise returns with guaranteed rent
Real estate is a tangible, real asset. There is always the potential for future appreciation with real estate but securing it at an attractive price is important so you can make capital gains in the future.
Signing a lease term gives property owners guaranteed rent for the rental period and reduces vacancy risk. Most co-living concepts are fully furnished, and there is often maximum space usage, which translates to higher rental yields.
The key is to find property management companies who have experience with co-living concepts and have a track record of a high occupancy rate to ensure property owners are not losing out on lost rental or empty lease periods.
- Making the most of space
A three-bedroom condominium apartment can now accommodate a suitable living area for a maximum occupancy of six residents by making the most of its available space. For this reason, co-living spaces present an excellent opportunity for property owners to maximise their investment.
- Amenities for added convenience
Maintenance and costs for cleaning, logistics, and handyman services can all add up. However, today’s co-living concepts are moving on to scale their solutions and focus on providing unique components that will appeal to the convenience of today’s working professionals.
Also Read: Most Singaporeans pay too much for their mortgage. Here’s how innovation can fix that
Without the need to outsource, there’s an option for property owners to save costs and pick property management companies that take care of logistics, cleaning, moving out services and in-house handyman services. This improves the staying experience and helps keep costs low.
- Putting the tech in property management
The tech-enabled services feature changes the game in property management. There are in-house tenant management apps to communicate and engage with your tenants, making issues easier to raise and communicate easily.
In the past, issues were done through messaging apps, making it hard for both parties to solve maintenance problems. With apps, tenants can raise tickets or maintenance or other issues arise. It allows a dedicated customer service team to respond and address issues promptly.
- Emphasis on community living
The pandemic may have proven disastrous for the industry where tiny bedrooms and all-inclusive apartments with strangers did not bode well with quarantine measures and work-from-home policies. But in reality, the co-living industry has come out stronger than before, offering the most valued item: convenience.
People get to connect with like-minded people and be part of a tribe that can network and collaborate, making co-living a full-proof investment as it catches on due to its attractive pricing and features.
The takeaways
With longer lease tenure, property owners are guaranteed stable income and could potentially see co-living as a sustainable investment. On average, property owners will see a 10 to 15 per cent increase in rental collected for a co-living unit compared to a traditional unit when renting it out to a tenant.
The new wave of co-living and heightened interest in alternative sources of property investments could potentially alter the real estate landscape in Asia.
More millennials, young professionals who have adopted a hybrid work approach, will need a flexible functioning environment to pursue their goals in the most accessible and convenient locations, paving the way for another asset class in the rental sector investment.
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