Ravi Chandran
Keppel Land Limited (Keppel Land) has taken a strategic minority stake in Cove Living Pte Ltd (Cove), one of Southeast Asia’s fastest growing co-living companies, as the lead investor in the start-up’s US$4.6 million Series A funding round.
Headquartered in Singapore, Cove was founded in 2018 and is a co-living company reimagining urban rental for young people. It currently has about 300 high-quality rooms and studios in Singapore and about 250 in its new market of Jakarta. By the first half of 2021, Cove expects to double its offering to around 1,000 rooms. To bring more homes to Southeast Asia’s young professionals and students, Cove plans to expand to other key markets in the region, including Vietnam and the Philippines.
Mr Tan Swee Yiow, CEO of Keppel Land, said, “This investment is in line with Keppel’s Vision 2030 and Keppel Land’s strategy, where we seek to offer a full suite of urban living solutions that are driven by technology and which are highly complementary to our core real estate business. Co-living solutions can be incorporated in our development projects, potentially augmenting their value, and be developed into scalable and sustainable recurring income streams for Keppel Land.
“Cove has a complementary expansion strategy into markets in Southeast Asia where Keppel Land is already present. It will be able to leverage our experience and wide networks as it scales up in providing well-managed, quality homes to a growing segment of those seeking creative shared living spaces that offer unique and vibrant community experiences.”
Mr Guillaume Castagne, CEO of Cove, said, “Cove is delighted to have Keppel Land onboard as the lead investor in our series A funding. We are fortunate to have found a partner that shares our vision to provide young people across the region with convenient, hassle-free housing options that can be booked at the click of a button. Together, we are well-placed to build a sustainable business that capitalises on the global co-living phenomenon, a market we have estimated to be worth over US$28 billion in Southeast Asia.”
Macrotrends including increasing urbanisation and changing demographics, as well as financial considerations and changing lifestyles among urbanites, such as an inclination to convenience, connectivity and community-centred environments, have enabled co-living to gain substantial traction as an alternate flexible accommodation option[1]. In particular, the growth of co-living has been driven by strong demand from millennials and those from Generation Z, many of whom have flexible housing needs which are not met by conventional home rental models[2].
Cove’s co-living platform leverages technology to make the renting process hassle-free. With a slick online listing platform and mobile application for tenants, the time required to find, view and book a room is significantly reduced. Cove also uses an artificial intelligence tool to build flat mate compatibility based on living habits, values and interests. Properties come fully furnished with high-speed Wi-Fi, housekeeping services and all utilities in an all-inclusive price. Contract terms are flexible with short minimum stays and no agent fees. Tenants also become part of a vibrant community with access to regular social and networking events.
Keppel Land said the transaction is not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.
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The Millennial move towards communal living, or coliving, is opening up opportunities for real estate developers and investors in Asia’s busiest cities. said a report by JLL. Co-living, a term used to describe a living arrangement that is something more than shared space, is growing in Asia.
Typically, a coliving facility will offer tenants small rooms but also shared facilities such as a TV room or a gym. There is also a social aspect; some facilities have a manager who will organise events. As well as convenience and community, co-living facilities also claim to offer cheaper rent than an individual apartment.
At present, some developments described as co-living are no more than upmarket dormitories for budget-conscious students, while others are just shared apartments with different branding. But from the property investor’s point of view, co-living offers an attractive opportunity to gain extra revenue from services and to be able to fit a larger number of rooms in a single building. Hotel owners have also been converting under performing hotels to co-living facilities.
In Singapore, affordable public housing is available to a large portion of the population and perhaps due to this, there is only a small portion of rental housing or co-living establishments. One of the key challenges faced by the co-living market in Singapore is the deeply entrenched home-ownership culture among Singaporeans which, coupled with the ability to unlock savings in Central Provident Fund’s Ordinary Account through property acquisition, has contributed to Singaporeans’ preference to buy rather than rent.
The report noted that some Singaporean companies are testing the water on coliving.
“In Singapore, the more common form of co-living operation is the asset-light leased model. For example, when Hmlet first entered Singapore, it started by renting units at different condominiums from individual landlords. To reap economies of scale, Hmlet subsequently also leased two entire residential buildings at Joo Chiat and Sarkies Road and converted them to dedicated co-living facilities.
In contrast, the business model of lyf, which is backed by Singapore’s largest serviced residence operator, The Ascott Limited, is a mix of an owner-operated and management contract basis. Their first co-living facility in Singapore, lyf@SMU, is a Living Lab at the Singapore Management University (SMU) which The Ascott Limited has co-invested in and co-managed with SMU.
