Changing trends: Pedestrians in the central business district of Singapore. Various state properties have been repurposed for co-living use, with demographic-specific projects for healthcare workers and students. — Bloomberg
SINGAPORE: Demand from foreign students – especially from China – is fuelling growth in Singapore’s co-living sector, where the market is maturing and returns are moderating, a report by property consultancy JLL shows.
Foreign students now account for 25% to 40% of residents for some co-living operators, noted JLL.
“Particular growth has been noted from Chinese student tenants in the co-living market.”
As of June 2023, there were 70,800 international students in Singapore, the report said.
This made up 4% of the non-resident population and formed “a substantial portion of enrolment” at Singapore’s top educational institutions, including the National University of Singapore and Nanyang Technological University.
The report added, “Intensified post-pandemic recruitment supports projections of 6.7% compounded annual growth rate (CAGR) for the higher education market from 2025 to 2031.”
JLL said: “The expanding international student demographic, alongside broader non-resident population growth, directly drives increased demand for rental accommodation and co-living spaces.”
The broader non-resident population, meanwhile, makes up 30% of Singapore’s total population and grew 5% year-on-year through June 2024, maintaining a five-year CAGR of 1.1%.
There is also stronger government support today for co-living development.
Various state properties have been repurposed for co-living use, with demographic-specific projects for healthcare workers and students.
Institutional investors are drawn to the steady demand and growth fundamentals of the co-living sector – but moderating returns and rising costs are tempering expectations, JLL added.
According to JLL’s market report published on Sept 17, co-living investment volume in the year to date exceeded S$200mil.
In 2024, such transactions totalled more than S$800mil, and amounted to around S$200mil each in 2023 and 2022.
Since 2023, “multiple transactions of existing co-living properties have crystallised, with several others being marketed for sale based on JLL’s understanding”, as early investors move to recycle capital.
But most transactions involved the conversion of existing assets – including hotels, offices and hostels – to co-living properties.
For instance, CapitaLand’s lodging unit Ascott reopened the former Hotel G as lyf Bugis in August 2024, after acquiring the freehold hotel for S$240mil in January that year.
The consultancy also noted the emergence of “en bloc conversions”, with investors repurposing older private condominiums as co-living spaces.
The Bayron by Cove was among the first such conversions, turning 63 private homes into 304 co-living rooms.
The freehold condominium in District 9 was previously launched for collective sale at a guide price of S$376mil in March 2021.
Cove operates under a long-term master lease with the property owner, Baron Albert, an entity linked to the estate of the late businessman Chee Teng Hee and the Chee family.
This partnership model allows the two to share the investment costs and rental upside, said JLL.
Since The Bayron by Cove’s launch in November 2024, around 48% of tenants have been students, and the remaining 52% are working professionals.
Most tenants are under 30, coming primarily from China, France, Italy, the United States and Singapore.
The top five operators – LHN’s Coliwoo, Cove, Habyt, CapitaLand’s lyf and The Assembly Place – account for around 65% of total stock as of the second quarter of financial year 2025.
Room inventory grew 17% between 2023 and 2025.
Capital players in Singapore’s co-living market include private equity firms, developers, family offices and high-net-worth individuals, institutional investors and specialised operators, with the majority – 81% – based in Singapore.
A survey of investor intentions also showed that investment timeframes have extended, with the recognition that co-living assets require longer stabilisation periods for optimal performance.
But the majority of investors surveyed by JLL – some 77% – still prefer three- to five-year holding periods.
Investors polled have also recalibrated their expectations of returns, JLL said.
A majority of 65% now target internal rates of return of below 15%, whereas in 2023, 52% of investors sought returns above 15%.
The shift in expectations “reflects the sector’s evolution from a higher-risk asset class to a more institutionalised investment category”, JLL said.
Despite growing investor confidence, the sector faces several challenges.
Economic headwinds and evolving government policies could affect Singapore’s appeal to young foreign professionals and, in turn, influence demand and occupancies, said JLL.
Operators also grapple with a limited talent pool for specialised roles and rising operational costs, especially in staffing and utility.
“The availability of suitable properties for conversion remains limited while acquisition costs continue to escalate, creating barriers to operator expansion,” JLL added. — The Straits Times/ANN
