By Mark Louis F. Ferrolino, Special Features Writer
Whether a solution to rapid urbanization and lack of affordable housing, or an answer to the shifting lifestyle of the younger generations, the co-living or ‘dormitel’ concept is gaining traction as an alternative option to traditional residential accommodations. This new and booming market segment is expected to grow further and is envisioned to shape the way of life in the future.
Professional real estate services firm Jones Lang LaSalle Incorporated (JLL) defines co-living as a form of housing where residents with similar interests and values share living space. While it is relatively a new concept in the country, this living trend is now becoming a norm in United States, Europe, and in some parts of Asia.
Similar to how co-working space grew in importance, the demand for co-living spaces is driven by the younger generations who look for flexibility, openness, and collaboration.
In the Philippines, the growth of co-living trend is not limited to such factor. Other reasons, according to MyTown, the first professional rental housing provider in Metro Manila and a homegrown brand under the Philippines Urban Living Solutions, Inc. (PULS), include the growing gap in affordable housing and the worsening traffic in the Metro.
“McKinsey & Company completed an affordable housing study in October 2014 that estimated the affordable housing gap at over $3 billion, and in 2016, the Philippine Housing Finance Conference determined a housing backlog of about 5.7 million housing units,” MyTown shared in an e-mail to BusinessWorld, noting that young professionals bear the brunt of this housing shortage, given that their wages are still too low for them to apply for a mortgage to buy a house or rent in expensive business districts.
Moreover, given the lack of accessible public transportation options and despite the government’s efforts to address traffic congestion through its “Build, Build, Build” program, commuting in Metro Manila remains worse.
After a survey to 1,200 respondents, MyTown learned that many young professionals spend a considerable part of their disposable income and an aggregate of three to nine full days per month on their daily commute, simply to get to work.
MyTown’s value proposition is for less than the cost of your commute, you can live in MyTown, walk to work, and play, learn, and meet new friend.
In addition to providing a solution to every individuals’ struggle in commuting, co-living space, according to MyTown, also benefits firms and organizations located in the metro in some ways.
“Employers are faced with increasing staff attrition, high rates of tardiness, and competition with other employers to hire talent. Moreover, according to Willis Towers Watson (a global advisory, broking and solutions company), HR benefits are the second most and an employee’s commute is the fifth most important reason for signing with a new employer,” MyTown said.
Mark Arellano Kooijman, chief executive officer of PULS, noted that corporate staff housing solutions in co-living buildings such as MyTown solve both the employers’ concerns on attrition and hiring, and the employees’ demand on living close to work and having a community to come home to.
Aside from the obvious benefits of staying in shared spaces, such as cutting commute cost and living closer to work, co-living tenants also enjoy more time that gives them the opportunity to do something productive.
“With the time gained by not having to commute two to four hours every day, co-living tenants have the power and time to develop hobbies, learn a new language, work overtime for extra income, or meet up with their group of friends. Life becomes more than just sleep, commute, work, commute, sleep — repeat,” MyTown said.
Moreover, with the in-house amenities in co-living buildings, such as gym, pool, spa room, cafeterias and other common spaces, tenants have more chance to achieve a balance between work and leisure.
In the case of MyTown, it said that their gyms, roof deck infinity pool, dedicated karaoke rooms, boxing rings with trainers, and a mini movie theater are the facilities mostly enjoyed by tenants in their buildings. To give them a more exciting after-work life, it also organizes various programs that encourage health, fun, and personal and professional development.
“Young professionals don’t simply seek for a place to sleep — they work hard in order to live a lifestyle they enjoy, and have a home away from home. From developing top of the line amenities, to providing convenient retail options and an engaging tenant activity program, MyTown is the young professional’s partner when you want to thrive in the city,” Jelmer David Ikink, group director of PULS, said.
At present, more property developers are starting to enter the co-living market segment by developing their own co-living brands and by establishing similar developments in the fringe areas of Makati and Bonifacio Global City central business districts.
According to Nauriz Zornosa, assistant research manager at JLL in the Philippines, in addition to property developers, the rise in the demand for co-living spaces has also drawn interest from real estate investors.
“Real estate investors are keen in this emerging property investment as it brings in stable recurring income, supported by lower land value for acquisition in the fringe areas, low construction cost, and low operational cost, among others,” Ms. Zornosa wrote in a report titled “Co-living on the rise in Makati and BGC” posted in JLL’s Web site.
In the years to come, industry players and experts believe that demand for this new market segment will continue to grow, especially in Metro Manila.
“We expect co-living spaces in Makati to triple in the next two to three years, serving as a middle ground for an untapped market looking for more comfort and amenities over the traditional dormitory and at a cost more affordable than a residential condominium,” Alvin Fernandez, senior director of Investment and Capital Markets at real estate consultancy Santos Knight Frank, said.
Given the growing affordable housing gap and infrastructure concerns in the country, MyTown believes that co-living is expected to increasingly become the best solution for the hardworking young professionals.
“We don’t see this as a trend, but a way of life that will become the norm in the future,” Mr. Ikink said.
Meanwhile, Ms. Zornosa said that young professionals are observed to penetrate the new segment, with property investors capturing the underserved market and expand their business.
The continued expansion of the offshoring and outsourcing firms and multinational corporations is likely to fuel the demand for co-living spaces as it provide affordable yet convenient housing options right in the heart of Metro Manila, she added.