WHEN 32-year-old Kit W.L. purchased a few units at The Robertson in Kuala Lumpur in 2016 for investment purposes, she had it in mind to rent out the units, Airbnb style, due to its strategic location.
However, property owners or investors are currently facing difficulties in selling or renting out their properties; particularly high-rise, serviced apartments or small office home office (SoHo) units located in the heart of Kuala Lumpur.
According to the National Property Information Centre, the number of unsold completed residential units – including serviced apartments and SoHos, totalled at 34,532, worth RM22.26bil, for the first quarter of this year.
Should a property owner decide to list his unit on Airbnb, there is then the time-consuming hassle of managing the unit.
This is where Malaysian home-sharing platform SubHome Management Sdn Bhd steps in.
Essentially, SubHome manages and markets a portfolio of home rentals, offering hotel-like services to vacation and business travellers looking for alternative, value-for-money lodging.
The company operates on a 60:40 revenue-sharing model, whereby the property owner receives 60% of the rental income, while SubHome takes 40% of the income and absorbs the operational costs of managing the unit.
Kit and the other investor-owners of The Robertson KL units entered into talks with SubHome shortly after the unit handover early this year.
By September, SubHome had set up a 24-hour concierge desk for its guests at The Robertson KL, with 200 units available for stay.
Kit shares that an attractive aspect of SubHome was its revenue-sharing model.
“This means that utilities and maintenance costs are covered and borne by SubHome.
“Unlike Airbnb, which has a profit-sharing model, all costs are deducted first, before the profit is shared between Airbnb and the homeowner, resulting in minimal gain to the owner.
“SubHome also monitors the usage of the air conditioner and water, to ensure that chances of misuse are reduced, which is more environmentally friendly.
“This is something that owners would not be able to do if they operate on their own, via Airbnb,” she says, adding that SubHome offers guests daily cleaning services.
The average return on investment (ROI) through SubHome is 11% per annum, based on the original purchase price of the property.
This was the average ROI garnered for a 490 sq ft unit leased under SubHome at Summer Suites KLCC.
According to SubHome’s website, the average occupancy rate for its units throughout the year is 85%.
Kit notes that the challenge in setting up SubHome at The Robertson KL was obtaining approval from the management of the building, as there were rules and regulations in place that were not guest-friendly.
“We needed to strike a balance, to enhance the property value for the benefit of both owners and developer.
“Hence, it was important to have good maintenance practices that could ensure property value appreciation.
“SubHome had a good track record, from managing units at Summer Suites KLCC.
“SubHome added a cafeteria as part of the building’s facilities and its good management practices was a value-add to the property, which increased the value of the property over time,” she elaborates.
After obtaining approval from the manager of the building, owners who participated in SubHome then renovated their units according to SubHome’s requirements, which includes a key card door lock and a card-activated time switch.
The only downside of SubHome is that owners are not able to screen their tenants and do not know who resides in the units.
Thus, the responsibility to filter customers or tenants lie in the hands of SubHome.
“It is vital that the property is well maintained, not just our respective unit(s), but the building as a whole, and we are trusting SubHome with this responsibility.
“How SubHome will be able to fill the rooms, will they throw prices, how will the owner’s income be affected – all these are at the discretion of SubHome,” says Kit.
To date, there are 417 keys under SubHome, located across Kuala Lumpur, Petaling Jaya, and Johor.
In KL city, the buildings are The Robertson, 188 Private Suites, Summer Suites, and Southview Suites.
SubHome is available at Alia Damansara Suites and Damen Suites, in Petaling Jaya, as well as 1 Tebrau Suites, Teega Suites, and Suasana Private Suites, in Johor.
Just last week, Tune Group and ECM Libra Financial Group Bhd, via joint venture vehicle Tune Plato Ventures Sdn Bhd, had collectively acquired a 50% stake in SubHome.
SubHome CEO Sandeep S. Grewal tells StarBizWeek that SubHome will be able to expand its marketing channels by leveraging on Tune Group, which will in turn allow SubHome to grow to a larger scale with the brand association.
“We have a solid support structure from Tune Group, which is helping us reach out for opportunities with other developers.
“We aim to grow to 3,000 keys by end-2019, entering new cities like Kota Kinabalu, Bangkok and Chiangmai, which are locations with great potential due to the large tourist population,” says Sandeep.
In 2017 alone, there were 26 million tourists visiting Malaysia, and this number continues to grow.
Tune Group is to play a supportive role to SubHome by providing operational support and controls through systems, processes, and expertise at Tune Hotels, as well as the listing of SubHome rooms across Tune Group’s travel accommodation platforms.