Rubix-navigation

Friday, March 29, 2024
Ha Noi:
TP HCM:
Da Nang:
Singapore:
Phnom Penh:
Jakarta:
Vientiane
Kuala Lumpur:
Yangon:
Manila:
Bangkok:
AUD-VND:
USD-VND:
GBP-VND:
JPY-VND:
THB-VND:
SGD-VND:
KRW-VND:
MYR-VND:
EUR-VND:
Dow Jones:
S&P 500:
FTSE 100:
DAX:
CAC 40:
NIKKEI 225:
Hang Seng:
VN:
en vi
Latest news

Investors embrace millennial co-living in Asia’s megacities

Financial Times
January 28, 2022, 01:45 PM GMT + 7
  • More than two-thirds of millennials in Asia live with their parents, while only 11 per cent of them own their own homes.

Shared spaces are beginning to look crowded. Even after the meltdown of WeWork in 2019, investors are piling into co-living and co-working companies. Sequoia last year selected

Rukita, a co-living company based in Jakarta, as one of the first recipients of money from its Surge programme, which provides funding for start-ups in India and south-east Asia.

Warburg Pincus has invested in three ventures in mainland China and one in Hong Kong, alongside partners including General Atlantic, Singapore’s GIC and Tencent.

Venture capitalists are betting that the sharing economy, in which quicker or more affordable access to goods or services is prioritised over ownership, will extend to property as it has done with the car industry. Their enthusiasm comes despite the collapse in the valuation of co-working space provider WeWork, backed by Japan’s SoftBank, from $47bn to under $6bn.

“Co-living is a much better business model than co-working, just as long as it doesn’t come with a WeWork kind of valuation,” said John Riady, a third-generation member of the family that controls Indonesia’s Lippo group. The conglomerate has invested in Cove, a co-living firm in Singapore.

lyf Funan singapore

The attraction of Asia for local and US-based investors interested in shared spaces is clear. More than two-thirds of millennials in Asia live with their parents, while only 11 per cent of them own their own homes - less than the global average of 15 per cent, according to Warburg Pincus, using data from CBRE. Many live far away from city centres and face long commutes in cities such as Jakarta where transportation infrastructure is especially woeful.

Both co-living and co-working models aim to take underused real estate and make it more attractive, in part by using technology to reach potential consumers. While co-working and hot-desking are motivated by cost-cutting, demand for co-living spaces is also driven by a desire for community and lifestyle benefits such as gyms as well as affordability.

“Co-living is all about getting the boundaries right between privacy and sharing,” said Sachin Doshi, founder of Weave Co-Living in Hong Kong, which has received $181m from Warburg Pincus. “Millennials want a mobile lifestyle and financial flexibility. You can’t have that with a mortgage.”

Mr Doshi adds that most of the largest Hong Kong developers have approached him with requests to invest in his company, which is now 18 months old. Warburg has an option to allocate a total of up to about $430m.

lyf Funan singapore

Millennials based in overcrowded cities are not only willing to accept less space but, living in a more virtual world than their parents’ generation, think about that space differently. Regardless of location, co-living developments typically offer small kitchen spaces, if any, within individual residential units since most of their young tenants are far more likely to have their food delivered. Hmlet, another co-living company backed by Sequoia, converted the parking space in one of its buildings into a large café.

Demand for co-living space is judged to be stronger than that for co-working - at least until millennial tenants decide to live with partners and have children. In most Asian markets, landlords can appear far more powerful than their counterparts elsewhere.

In Hong Kong, affordability is a serious issue. The protests in the city were triggered by popular opposition to a proposed extradition law but have quickly morphed to encompass income inequality and the appalling shortage of reasonably priced flats.

In mainland China many residents are forced to rent rather than buy their homes due to a requirement that they obtain a permit to purchase property in the most popular cities, part of Beijing’s efforts to control internal migration.

Indonesia has its own peculiar features. Landlords can demand 12 months’ rent in advance, even though the occupancy rate is low as a result. Yet they wish to avoid establishing a new lower base for rents.

Moreover, few universities in Jakarta provide student accommodation. “Landlords keep building more of the same of what there is no need for,” said Sabrina Soewatdy, a Rukita co-founder. “There is an oversupply of the wrong products. We are bringing underused assets to market and serving our own generation.”

Almost all the great fortunes in Asia in the past few decades have been made on the back of property. Now a new generation of investors and young tenants is trying to shake up some of these real estate monopolies.

X
Your comment:
There are no comments for this article.