Hmlet: A novel approach to apartment-sharing

By EdgeProp / EdgeProp | July 23, 2018 8:00 AM SGT
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A 65-year-old Singaporean property investor called Mrs Lim has been credited with giving the co-founders of Hmlet a leg-up in their co-living business in Singapore. In 2016, after speaking with Yoan Kamalski and Zenos Schmickrath, Lim decided to lease out her three-bedroom unit at Riverwalk Apartments to them as a test run for their co-living business.
Hmlet revamped the three-bedroom unit into a four-bedroom apartment, and rented it out to individual tenants. In return, she was able to generate a rental return without having to actively manage the apartment herself. “We didn’t know her,” recalls Kamalski, who is also CEO of Hmlet. “We found her property online back in the day, and she is now still the landlord we’ve worked with the longest.”
Since 2016, the company has gained 250 members, across 36 nationalities. It started with renting units from individual landlords, but now also manages entire buildings to achieve economies of scale. The first was Hmlet @ Joo Chiat, a building in East Coast that is owned by listed property group Oxley Holdings.
The company’s latest offering is Hmlet @ Sarkies, located in a 32-unit apartment block called Portofino at 6 Sarkies Road, off Bukit Timah Road. Hmlet has leased the entire building from landlord ANB Investment. The co-founders of Hmlet spent a few months revamping the units and converting the building with a floor area of 30,000 sq ft into 84 rooms for co-living.
The rooftop space has been turned into an entertainment deck that can be loaned out for private gigs. It comes complete with barbecue pits and a waterproof sofa set. As a finishing touch, the team hired a local Singaporean artist to paint murals on the walls. The basement car park has also been partially converted into a co-working lounge.
Launched in April, Hmlet @ Sarkies is now 75% occupied and 100% leased.
Co-living versus rentals?
Hmlet @ Sarkies, within the Newton neighbourhood, is now 75% moved in and 100% sold (Credit: Samuel Isaac Chua/The Edge Singapore)
Of the 250 members, only a handful are Singaporeans; the majority are British and French. This is not surprising. “The younger expatriates may be more open to the co-living concept,” says Ong Teck Hui, JLL national director of research & consultancy. “Most Singaporeans tend not to lease, as they would rather own their homes, with long-term investment in mind.”
Young Singaporeans now have a stronger ability to become homeowners because of government support, Ong says. They can unlock their Central Provident Fund accounts for HDB purchases, he explains.
Ong, however, does not believe that co-living would affect rentals and vacancy rates. The co-living industry constitutes just a small portion of the overall rental market, so the impact “would not be significant” at this juncture, he says.
Alan Cheong, Savills Singapore head of research, believes co-living complements the residential rental market. The co-living trend could gain traction, especially from owners who have multiple investment properties and would like to avoid the hassle of sourcing for and managing tenants, and dealing with wear-and-tear issues. “Why not get a co-living space operator to handle those instead? You’ll deal with only one party,” Cheong says.
Higher gross yields, less hassle for landlords
The co-working facility in the basement of Hmlet @ Sarkies was originally a carpark space (Credit: Samuel Isaac Chua/The Edge Singapore)
Asking rents for the common bedroom at Hmlet @ Sarkies is from $1,400 a month, while the master bedroom costs $1,800 a month. Although rents for co-living space versus standard rents do not differ much, the former provides additional room services, which are charged separately, says JLL’s Ong.
According to Kamalski, Hmlet can achieve gross returns of 3% to 4% for property owners. Comparatively, average rental yields in Singapore’s residential market is in the 2.5%- to-3% range, notes Savills’ Cheong.
Ong believes that while landlords may not necessarily get higher net rental yields after deducting miscellaneous costs, they would be free from the hassle of leasing individual units out.
More individual landlords are finding it hard to rent out their apartments. Residential rental rates fell 12.5% over 15 straight quarters before bottoming out in 3Q2017. The rental market has since seen “modest improvement”, Augustine Tan, president of the Real Estate Developers’ Association of Singapore told the audience at the Redas Property Market Update Seminar on July 17. According to Tan, the rental market increased 0.3% in 1Q2018, after a 0.9% decline in the previous quarter.
As a co-living operator, Hmlet can attract a large number of tenants fast, which makes it attractive to landlords. “On top of a higher return, every single space we have operated breaks even within eight months,” says Kamalski. “We can do that because we incorporate hospitality into the core of our business.”
More than filling rooms
Hmlet members can use the rooftop space to host private barbecue parties (Credit: Samuel Isaac Chua/The Edge Singapore)
Beyond filling spaces, the company organises member-only events at its co-living facilities, and hosts events at bars and restaurants, says Schmickrath, managing director of Hmlet. He believes such activities are “core” to building a strong community in a co-living space.
As Hmlet grew bigger, it was able to sign up for longer leases and adopt a profit-sharing model with landlords. Hmlet @ Sarkies, for instance, is signed on a 10-year lease. The company initially started off with twoto three-year leases.
Last November, Hmlet closed its US$1.5 million seed financing led by Aurum Investments, a Singaporean multimillion-dollar venture capital fund under Woh Hup Holdings, an established construction company in Singapore. Since then, Hmlet has been ambitious about expansion. It plans to double the number of members living in Singapore by year-end, and expand its international footprint to Hong Kong, Bali and Jakarta. Currently, the company already operates co-living spaces in Tokyo.
Besides incentivising landlords, another factor that Hmlet has going for it is its flexible leases. All members are required to stay for at least three months — in line with URA’s regulations for short-term rentals — and will need to pay an upfront one-month deposit. After the initial three months, the lease renews automatically each month. This makes it flexible for millennial professionals who may be in Singapore for the short term and do not want to be tied down by long leases, Kamalski explains. At Hmlet spaces, the average stay of members is 13 months.
Technology-backed business
Facilities at Hmlet @ Sarkies include a swimming pool and jacuzzi (Credit: Samuel Isaac Chua/The Edge Singapore)
Technology is at the core of Hmlet’s operations. All members are connected by an app, which allows them to chat with other residents, request services and lodge complaints. Data collected through the shared platform is also used to inform decisions, such how to match members who live in the same unit, and how to design spaces. The size of the kitchen, for instance, was built smaller as the team learned that their members often eat out, Schmickrath points out.
While there are three major operators in the co-living space right now — Hmlet, mamahome and lyf, which is under the Ascott’s serviced residence arm — Hmlet is by far the most established in Singapore.
For the adventurous who want to experience co-living, Hmlet encourages an “open mind”. It mixes up the personality types and genders in a unit on purpose. “It just makes sense when we perform our magic behind the scenes,” says Kamalski.

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