Arch Capital plans to offer about 150 units in three projects across Hong Kong. At Oootopia Kai Tak, its first such project in To Kwa Wan, it is charging between HK$9,400 (US$1,198) and HK$15,200 for units ranging from a studio measuring 110 sq ft to a two-bedroom apartments measuring 208 sq ft, with one of the rooms only big enough to accommodate a single bed.

These rates translate to HK$73 to HK$85 per square foot, about 93 per cent to 108 per cent higher than rents of traditional apartments in the area.

Co-living becomes quite the rage among Hong Kong’s young professionals

“Rents are much higher than in traditional flats. However, they come fully furnished … with amenities that standard leases do not necessarily offer,” said Letizia Garcia Casalino, head of residential services, Colliers International Hong Kong.

Residents have their own bedroom, toilet, a small storage space, but share living and laundry rooms and the kitchen with other tenants.

“This asset class is quite new. I mean, in our 13-year history, we have been involved in 29,000 residential units … We know how to built homes so we actually know what people like, what they would pay for. We can expand this business, so this is something we know well, and we think we are addressing the market in the right way,” said Richard Yue, Arch Capital’s chief executive and chief investment officer.

Hong Kong’s co-living space goes upmarket as rents and home prices soar

According to Karen Kwok, director of portfolio management at Arch Capital, 80 per cent of the 56-unit Oootopia Kai Tak has been leased. The facility opened in January this year. Another Oootopia is expected to open this month in Tai Kok Tsui and will have 49 units. A third property, located close to the University of Hong Kong, is set to be launched within the year.

“I think there is a market for a quality, coherent living environment and we started thinking about this. I know a lot of young people who live in Hong Kong, in their 20s and 30s, and they complain that they can't afford to buy anything in Hong Kong,” said Yue, who refers to himself as Oootopian no. 1.

He said Oootopia was more of a serviced residence, and that the brand emphasised community, which was important for millennials and newly arrived expats in the city.

Oootopia Kai Tak certainly gives the impression it is tailored to single millennials. On the ground floor is a living area with a television, sofa, dining tables and chairs that are available for all residents and their guests. The area can accommodate as many as 30 people at any single time. It comes stocked with a number of popular board games, such as Catan, Exploding Kittens and Cards Against Humanity. Every bedroom has a welcome rug that says “the key is to dream”.

Community events for residents are also organised, and include whiskey nights, hiking as well as a recent visit to a care home for the elderly.

Yue did not disclose how much Arch Capital was spending on these properties, or who the company’s investors were.

A study by the property consultancy found housing options for graduate students were limited, while renting an apartment in Hong Kong has in recent years been taking up 80 per cent of starting salaries of young professionals, up from 45 per cent in 2006.

Tom Broderick, senior manager of research at JLL, said the co-living segment still mainly caters to students and young professionals.

“However, over time, this may move towards young professionals, with the government looking to address the current shortfall in student accommodation by providing the HK$10.3 billion hostel development fund,” he said.

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