Hong Kong's co-living operators slash prices by up to half as people observe Covid-19 social-distancing guidelines

By Cheryl Arcibalcheryl.arcibal@scmp.com / https://www.scmp.com/business/article/3077615/hong-kongs-co-living-operators-slash-prices-half-people-observe-covid-19?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp&utm_content=3077615 | April 6, 2020 10:21 AM SGT
Operators of shared living spaces in Hong Kong have slashed their monthly rates by as much as 50 per cent as they navigate a new normal of social distancing and people avoiding large crowds amid the Covid-19 pandemic.
"We offer 30 to 50 per cent discounts for our units in different locations," said Zeta Yung, co-founder at The Cube Group that operates about 80 units in five locations on Hong Kong Island and in Kowloon.
The occupancy rate at Cube's properties had dropped to half in February after Hong Kong reported its first case of the highly-contagious disease on January 22 and then rolled out containment measures such as closing the border with mainland China, getting government employees to work from home " a practice that was largely adopted by the private sector too " and, more recently, limiting diners to four people per table.
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Last week, the government also banned the transit and entry of any non-resident foreigners in the city following a spike in the number of imported Covid-19 cases.
The discounts mean Cube's tenants are now paying between HK$4,500 (US$580) and HK$7,000 a month for units measuring upwards of 80 square feet. They typically get their own bedroom, but have to share a bathroom, kitchen, and other living spaces.
"All in all, the demand is still there but there is a shift from the expat-dominant base to more local inquiries for us with the immigration restrictions," said Aaron Lee, founder of Dash, which operates 87 co-living rooms in Tsim Sha Tsui and Mong Kok.
Dash has offered, on average, a discount of around 15 per cent compared to a year ago, Lee said, which translates to a reduction in rent of between HK$2,000 and HK$2,500.
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After discount, rents at Dash range from HK$10,000 to HK$25,000 a month for units of between 100 square feet and 350 square feet.
The rent is still not significantly cheaper than traditional flats. A 189-square-foot unit at a 42-year-old housing project, Lee Loy Building in Wan Chai, is on the market at a 9 per cent discount to HK$12,500 a month, according to Ricacorp Properties' website. The landlord was originally asking HK$13,800 per month.
Home rents in Hong Kong dropped 7.25 per cent in January after peaking last August, and industry experts believe they will drop further in the coming months as leasing demand is sapped by the Covid-19 pandemic.
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Co-living " in which renters have their own bedrooms but share other space like kitchens and living rooms " had seen a surge in popularity in Hong Kong, particularly in 2019, as tenants preferred the flexibility they offer compared to traditional flats that require a lease agreement of two years. Dash, in particular, allows tenants to stay for as little as a month.
The rooms allow would-be tenants to move in straight away as they are typically furnished, complete with linens. Last year, co-living operators said they were planning to triple the number of units from about 400 to 1,400.
Another operator, Hmlet, said it has "chosen to be flexible with our members as much as we can" should they need to leave Hong Kong earlier than expected or change their accommodation during the coronavirus outbreak.
"The situation remains unpredictable at this point, but there will inevitably be some impact on the co-living market. Lower rents for traditional flats are certainly competing with co-living products in Hong Kong, but we are seeing co-living operators also offering discounts to stay competitive in the market," said Alvin Leung, director of capital markets at JLL
The co-working sector has been hit harder by the coronavirus than its co-living counterpart.
People still need somewhere to live, but the social distancing campaign has made them more cautious about hygiene, and inclined to avoid sharing spaces and amenities, preferring a fixed workspace, said Maggie Hu, associate professor for finance and real estate at the Chinese University of Hong Kong.
"With the imminent and tangible risks of the virus, most subscribers for co-working space would prefer to work from home or have a place of their own, and would avoid leasing a shared working space," said Hu.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.