In this downturn, people need flexibility and affordability in their accommodation.
It’s easy to think that co-living may be vulnerable to the coronavirus disease 2019 (COVID-19) pandemic because of the need for social distancing but in reality, the tough times may actually provide the right living solution for some individuals who can no longer afford regular living options.
On the surface, it seems the pandemic has left no real estate asset class unaffected. The office sector is recording higher vacancy levels, the condominium market is seeing lackluster demand, and the hotel market is operating on limited operations.
However, it’s another story for the co-living business. The pandemic has actually brought out opportunities for operators, says Philippines Urban Living Solutions/ MyTown Co-Living Group director Jelmer David Ikink.
“What we see is that co-living is one of those defensive asset classes because it’s outperforming other real estate asset classes like hospitality and retail,” Ikink said during a recent webinar organized by Santos Knight Frank.
“We see that both in an upturn when urbanization is hot and people are coming into the city and need to look for affordable living, and also in the downturn when people need flexibility and affordability in their accommodation,” he added.
In industry parlance, co-living, which is part of the residential leasing market, is a form of housing where individuals with similar interests or values share a certain living space. Co-living spaces serve as a short-term living solution for professionals as well as students commuting to the Metro.
The Philippine co-living market has been growing in recent years, serving as an affordable and viable solution to Metro Manila’s traffic congestion for employees and young professionals working within or near central business districts.
Even the big property developers have taken notice of this real estate asset class. The SM group has its MyTown brand while the Ayala Group has The Flats projects, located within CBDs or in the fringes of business hubs.
Santos Knight Frank senior director for Investments and Capital Markets Alvin Fernandez said the supply of co-living spaces in Metro Manila is expected to further grow in the next two years, with an additional 2,000 rooms or equivalent to 6,000 beds to be added to the current market supply.
“Most of these projects will offer about 300-500 rooms equivalent to about 700-1,500 beds with a price range of P6,000 to P7,500 per bed,” Fernandez said.
Among the upcoming dormitel projects in Metro Manila are The Flats Circuit, iDorm The Fort Kalayaan and The Fort Agutaya, LodgePlus, and Harvard Suites.
At the end of last year, the supply of co- living rooms in Metro Manila reached 5,605 rooms. This is expected to grow to 5,694 rooms this year, an addition of 89 new rooms.
Fernandez said co-living spaces in the Pasig and Taguig areas registered the highest occupancy rates at 81 percent and 80 percent, respectively due to the high demand among university students and working professionals.
Flexibility, affordability and convenience have now become even more important amid the pandemic, with factors such as an uncertain income stream now driving people to look for flexible and affordable accommodation solutions, MyTown’s Ikink said.
He added that the MyTown brand offers bed spaces for as low as P4,000 a month.
Kristopher Yang, president of First Georgetown Ventures Inc., operator of The Grid Co-living shared the same view as he emphasized that co-living offers a more cost-efficient solution compared to condominiums or houses.
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