Husband-and-wife team Ernee Ong and Jelene Sim have always been savvy real estate investors. Although the couple have a deep passion for the industry and a keen eye for deals, that did not matter as property cooling measures imposed by the Singapore government set in and returns became less attractive.
“It became more difficult to buy properties without the additional buyer’s stamp duty and it was getting too expensive to invest directly in properties. We had to find other ways to get better returns with real estate,” says Sim, adding that they had previously bought properties and rented out the rooms to bring in income.
Through a friend’s recommendation and out of curiosity, they delved deeper into the world of co-living properties. Both husband and wife were previously working in the tech industry, and the need to travel frequently and work long hours pushed the two to leave their jobs and start their own co-living venture, Bespoke Habitat, in 2019, with the aim of providing affordable living spaces.
They reached out to property agents and property owners to offer their services to convert spaces into co-living properties and to manage them too. Ong shares that the company has managed to scale up rather quickly. Today, Bespoke Habitat manages about 240 properties without owning a single one.
While there are several other co-living brands out there, Ong explains that Bespoke Habitat serves the segment slightly above the mass market, and its properties are not located within the town or CBD areas. Instead, Bespoke Habitat’s properties are located in the suburban or city-fringe areas, such as Tiong Bahru, Queenstown, Tanah Merah, Bedok and Jurong West, to cater to the working executives and students in the respective areas.
“The boom in the short-term rental space during the pandemic has made co-living a very ideal way to live. A section of working professionals who have adopted a hybrid work approach will prefer to stay in co-living spaces, rather than apartments or hotels, to connect with like-minded people,” says Ong.
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Similar to most co-living players in the market, the majority of Bespoke Habitat’s tenants are foreigners, although there is a small percentage of Singaporean tenants who have opted to live in the co-living spaces. These locals typically choose the space to live in, which is close to their workplace. Some of them seek a temporary living space as their home is undergoing renovations.
Ong shares that focusing on these tenant profiles allowed Bespoke Habitat to breeze through the pandemic, as the brand was able to continue its expansion even during the peak of the pandemic, while its occupancy rates remained at over
90%.
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Recently, Bespoke Habitat launched its “Signature” collection in Pasir Panjang, which has larger spaces within a landed property at an affordable rate. The units in this collection include amenities from beds and wardrobes to a fridge and washing machine. The rents for these start from $2,800 a month.
With Bespoke Habitat managing about 240 properties including its latest Bespoke Habitat Signature collection, Ong shares that the properties are about 99% occupied by some 1,200 tenants.
Asset-light business model
Ong and Sim say the business they have started allows them to invest in the real estate industry without having to own any properties, making it an asset-light business.
Bespoke Habitat has two types of business models: a direct property management model, as well as a lease and sub-lease model.
Under its property management model, the property owner hires Bespoke Habitat to manage the property. Bespoke Habitat then bills the property owner for a percentage of the rental income from tenants or via a fixed fee model.
A property in Telok Kurau is an example of a property under the direct management model. Sim explains: “The landlord will collect all the fees from the tenants, and we will bill the landlord property management fees.”
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As for the lease and sub-lease model, Bespoke Habitat offers value-added services on top of the landlord leasing the property to them, says Sim. Such services include weekly cleaning, managing tenant issues through a mobile app, and quarterly aircon servicing. Under this model, the company will have to come up with more capital, as it will incur renovation or rejuvenation costs.
On average, Bespoke Habitat’s leasing contracts with the property owners are for about three years, and can go on for up to about six years. Ong and Sim share that the company is able to confidently renew about 70% to 80% of the leases of its properties.
Ong says the short leasing period is not a challenge for the company, but is instead a benefit to them.
They explain that firstly, three years is just enough time for any market changes to take effect and for the company to be able to come up with decisions on what to do next. With a long lease, it will be difficult for the company to be flexible with its commitments. Secondly, the average stay of a tenant is about six months to a year. With lease renewal decisions made at least a year before the lease expiry date, Bespoke Habitat has enough time to give notice to its tenants; this also gives the tenants ample time to scout for another property.
When looking for properties to work with as co-living spaces, Bespoke Habitat has a checklist to ensure that its properties are able to attract new tenants. The criteria include close proximity to a MRT station, close proximity to international schools or universities, and the facilities within the property.
For example, the Bespoke Habitat Signature in Pasir Panjang is within close proximity of the National University of Singapore, the Mapletree Business District, one-north and Science Park 1. The property is also located by a pavement, making it safe for tenants to walk around the area.
Expansion plans
In January 2022, Bespoke Habitat managed to raise $1 million to fund its expansion in Singapore.
Ong and Sim share that Bespoke Habitat Signature is a new concept with a bigger space that the company has recently launched. In addition, it is rolling out yet another concept — Bespoke Habitat STAS or short-term accommodation services.
“We have recently secured a building and are currently doing the renovations. The Bespoke Habitat STAS will offer even larger spaces for a group of people living together, like a whole family; or on a short-term basis, for instance, when an expat moves over for work, he is able to bring his whole family along,” explains Ong, adding that this new-concept property should be launched by mid-May.
With so many properties in hand, how does Bespoke Habitat properly manage all of them?
“Our aim is to use technology to create living spaces that support the lifestyle of the young and single-demographic household from Singaporeans to expats, further enabling a high level of comfort and convenience,” Ong says.
The company has built its own mobile app and web-based platform, incorporating enterprise resource planning and customer relationship management systems to smoothen daily operations and provide transparency to both tenants and landlords.
Ong and Sim realised that with the mobile app, it was easier and more efficient for them to start their own facilities company that will work on all Bespoke Habitat properties. That way, not only do they have better control over the quality of the work, but work can also be conducted in a more timely manner.
“When we first started, we didn’t have the capacity and we had to outsource the maintenance work. But as we stayed longer [in the business], we became more familiar with the landscape. That was when we started to build our own facilities team,” says Sim.
Ong stresses that Bespoke Habitat is not just a co-living operator. The start-up aims to be a full end-to-end solutions provider, offering services from logistics and cleaning to in-house repair and moving-out services.
On top of that, the couple are also starting a staging business, where they will rent out furniture to those renting a workspace, or even to property agents who want to stage a property that they are looking to sell. The couple are also looking to start a storage business and a moving business, covering almost the whole spectrum of the supply chain. The couple intend for both the staging and storage businesses to be up and running by the end of this year.
Looking ahead, an initial public offering may be on the cards for Bespoke Habitat. But at this point of time, it is not the company’s priority; expansion in Singapore and expansion of adjacent business offerings are currently at the top of Bespoke Habitat’s list.
