Millennials avoid high rents and drive co-living boom across Greater Bay Area and elsewhere in China
Young Chinese flock to affordable room spaces with communal facilities and greater connectivity as residential prices soar in the nation’s larger cities
High rents, greater connectivity and lack of space are driving the co-living trend in mainland China and Hong Kong. This is where residents pay for room space and then share a variety of communal facilities and amenities such as Wi-fi. Often tied in with co-working spaces, the co-living facilities are sold as a tech-entrepreneurial community space, which critics have derided as subdivided housing in fancy dress.
“For those locked out of the residential market, the emergence of the co-living model offers an affordable housing solution for their needs: an alternative to staying in the family home, sharing a rental unit, or living in a subdivided flat,” says Denis Ma, head of research, JLL Hong Kong.
“In addition, the community elements touted by most co-living schemes have the potential to improve the overall well-being of residents.”
Love or hate it, co-living is growing exponentially in Asia and Greater China. In Hong Kong, spaces such as Bibliothèque in Yau Ma Tei; SynBOX in Hung Hom; M3 International Youth Community in Central, Prince Edward, Tsim Sha Tsui and Sham Shui Po; Mini Ocean Park Station in Shouson Hill; and Campus Hong Kong in Tsuen Wan have all proliferated.
The concept has expanded to blend hotel and living experiences into one. The team at Mojo Nomad in Wong Chuk Hang, which combines spaces for residents and visitors, quotes government figures showing Hong Kong’s sharing economy could account for 10 per cent of the city’s gross domestic product by 2020. The trend continues in mainland China, particularly in Guangzhou, Shanghai and Beijing.
“The demand from millennials for co-living is huge in mainland China,” says Joe Zhou, head of research, JLL China. “In the past five years alone, there were 43 million new graduates. Given the high housing prices across the country’s Tier 1 and 2 cities, it will take at least three to five years for them to start purchasing their own homes.
“This means that many of them will have to rent or look for short-term alternatives. Therefore, co-living is definitely an attractive option.”
The proliferation of operators such as YOU+, China Vanke, Mofang Gongyu, ZiRoom and Coming Space as a sign of traction in the market, JLL adds.
You+, for example, is operating in Beijing, Chengdu, Foshan, Fuzhou, Guangzhou, Hangzhou, Shenzhen and Shanghai, with plans to open in Dalian and Nanjing. If the Greater Bay Area develops further, the operators’ reach could be expanded to reach demand.
In Hong Kong, Campfire Collaborative Spaces is expanding into co-living with the creation of Campfire Home for mainly young professionals, entrepreneurs, interns and university students.
The group’s sources estimate that there are 58,500 young professionals living in the city – the equivalent to 0.8 per cent of the population – with approximately 8,750 postgraduate students and 95,000 full-time undergraduate students provided around 36,000 places in university residences.
The company has therefore estimated that 68,000 undergraduate and postgraduate students either live at home or need to meet their housing needs in the private rental market.
“Co-living is a new way for people to live in cities, designed to provide convenience, quality and a genuine sense of community, offering the opportunity to build valuable connections through our Campfire communities in Hong Kong and beyond,” says Wang Tse, co-founder and CEO of Campfire Collaborative Spaces.
“In terms of house prices, Hong Kong ranks as one of the world’s least affordable, and the situation is only likely to get worse for those who have been struggling to get on the housing ladder,” Tse says.
“Our sources predict an additional 15 per cent increase in house prices by the end of 2019, while the cost of renting a studio apartment can already be as high as HK$18,000 per month in more centralised locations.”
In an examination of wages against house prices, between 2009 and the second quarter of 2017, “key research shows nominal wages grew by 45 per cent”, Tse says.
“In comparison, rentals for mass residential properties surged 102 per cent over the same period, more than double that of nominal income”.
He adds: “With the cost of living increasingly becoming unaffordable for the millennial generation that craves independence.”