Singapore's rising rents have lonely expats turning to co-living

By Faris Mokhtar

(Bloomberg) — Forget swanky private apartments. In Singapore, some expats are happy with a room.

Sure, these are more than just a room — think heritage buildings and cleaning services — yet the embrace of a lifestyle more commonly associated with students illustrates how things have changed for some overseas professionals in the city-state.

Uncertain work prospects, brewing anti-foreigner sentiment and closed borders have taken the shine off a gilded lifestyle. Now as friends leave and rents rise, those who remain are looking for options.

While it is still a minority choice, co-living, where you rent a room and share communal spaces like kitchens, has two main things going for it. First, it’s cheaper: think S$2,800 for an ensuite room vs S$3,500 for a one-bedroom condominium in the city center. Second, less commitment. Leases start from three months compared to a minimum full year for a condo, appealing for those worried about job security or uncertain how much longer they plan to stay.

One of those who’s made the leap is 31-year-old Simon Nguyen, a Vietnamese software developer who’d previously rented a condo with friends for more than seven years. After his flatmates moved back home, Nguyen and his wife decided renting on their own would be too pricey and they couldn’t face the hassle of searching for new, compatible people to share with, especially while having to work from home.

Instead they rented an ensuite studio in a complex of 117 rooms, A 10-minute walk from the Unesco World Heritage Botanic Gardens. While it might not have the pool and tennis court of expat-focused condos, communal facilities include an office as well as a gym. At a fraction under S$2,000 a month, inclusive of utilities, they’re saving more than S$200 a month on their previous rent.

“It didn’t make sense to keep a big space, not just because it’s expensive, but also with more maintenance work to do,” Nguyen said. “We get a balance of personal space and interacting with other tenants.”

Commodity trader Jung Woo Hwang is another who’s embraced shared living. After his wife went back to their home country, South Korea, to give birth he moved into a co-living space just outside the financial district on a short-term lease.

“It gives me the flexibility of looking at other residential options should I want to move around in the near future," Jung said. "On top of that, my current rent is also about 20% cheaper compared to when I was renting a condo."

Growth Trajectory

While co-living isn’t going to overtake condos for popularity anytime soon, it’s starting to become a more accepted option. There aren’t any definitive figures for how many people in Singapore live in such accommodation, but operators say there is a clear growth trend and they are launching new buildings to meet demand.

Coliwoo, which has six residential buildings with over 860 rooms, says demand from expats has risen 10% over the past year. Expats and international students make up 67% of its residents.

It might sound odd that, during a virus outbreak, demand for living at closer quarters has risen, but Kelvin Lim, executive chairman of the Hong Kong-listed LHN Group Pte, which owns Coliwoo, says in Singapore where the virus is largely under control but restrictions remain, it’s all about “distraction-free living”.

Many co-living buildings include communal offices, meaning you don’t have to battle flatmates for laptop space at a kitchen table or try holding work calls while others are making dinner.

These are also driving adoption among millennial Singaporeans who traditionally tend to stay with parents until marriage and focus on saving money for an apartment purchase. “Sharing a tight space in a flat with many family members who are working on various tasks at the same time hinders work performance and productivity,” Lim said.

Offices in Singapore are still only allowed to operate at 50% capacity.

In a world of virus curbs there’s also the social aspect, particularly for expats without family close by. Rising demand is partly due to “the loneliness of being cooped up at home and missing out on the sense of community you get with a like-minded crowd”, said Fang Wei Low, founder and chief executive officer of Figment, which operates one of the swisher offerings.

Its rooms in heritage shophouses, all with different interior design concepts, range from S$1,700 to S$4,500, depending on the location and type of room. Facilities such as kitchen, dining, living and laundry rooms are shared.

When normal organised activities like yoga classes were suspended because of virus curbs, operators moved activities online. Coliwoo, for instance, offered classes on knitting.

Growth Limitations

Still, there are a range of handicaps to a large-scale expansion of the sector. “Having a reliable supply of long-term rental space situated close to locations popular with young urbanites will be a challenge,” said Jennifer Chia, head of corporate real estate at TSMP Law Corp. “But first, we need to get out of the doldrums that Covid has brought about.”

The Covid world is an uncertain place to operate. At the height of the pandemic in Hong Kong co-living operators had to slash rents by as much as 50%. Consider also co-living startup Hmlet, which tried to scale-up operations across six countries. Faced with slowing demand, a cash crunch and a top management exodus, it pulled out of Australia and halted expansion in Malaysia and Thailand.

Demand among expats could also fall if Singapore continues to tighten entry options for foreign professionals or if multinationals decide to reduce their presence.

Still, these factors are likely to be headwinds rather than deal breakers as changes in the working population — such as workers arriving on shorter-term contracts — boost demand, said Alan Cheong, executive director of research at Savills Singapore. “Co-living is here to stay.”

©2021 Bloomberg L.P.