Exploring Co-Living in Malaysia: A Quick Guide for Investors

Co-living is an urban type of accommodation with shared living spaces, and it has been gaining traction, especially among millennials, Generation Z, and investors seeking opportunities in the real estate market. Let’s look into the intricacies of co-living, investment considerations, legalities and more!

Expensive properties in city centres such as Hong Kong and Singapore led to the emergence of co-living as an option for young professionals and students. While it was originally targeted at short- to mid-term foreign residents such as expatriates and international students, co-living arrangements have also attracted long-stay residents, including local students, young professionals, and new families.

The same is happening in Malaysia. Knight Frank’s Commercial Real Estate Investment Sentiment Survey 2020 (CREISS 2020) report highlighted that the co-living concept has been gaining traction, especially among millennials and Generation Z.

Co-living addresses some of the financial concerns of living in the city centre, offering a lifestyle without having to worry about a mortgage. Co-living was impacted during the COVID-19 pandemic as social distancing was difficult when you’ve to share a home with others, some of whom may be strangers or short-term renters.

As the trend of co-living continues to evolve, it’s crucial that investors understand its nuances. Is it a good investment or could it be a pitfall? Before you jump on the bandwagon, let’s unpack the pros and cons of investing in co-living and see if it fits your investment strategy.

Co-Living vs. Roommates

Yes, co-living involves shared spaces. Although co-living is a good option for property owners to consider, one must truly understand it and not confuse it with a hostel or a “student house” or workers’ quarters.

All-Inclusive Rent

Co-living spaces are professionally managed, often offering private rooms with amenities like communal kitchens, co-working areas, lounges, and social event spaces. Tenants often pay an all-inclusive rent, covering utilities, internet, and sometimes even housekeeping.

When deposits are paid, “tenants” could just move in with just their luggage as the main furniture and necessities are provided.

Community and Networking

Co-living spaces are designed to foster a sense of community and encourage collaboration and social interaction among residents. Its conveniences are a major draw for specific groups, such as young professionals and digital nomads seeking a hassle-free, social living experience. Investors, take note – this translates to higher potential rent compared to traditional rentals.

Unlike staying in an Airbnb or renting a room, co-living actually offers communal living where every resident shares the responsibility in maintaining the living environment.

Shorter Term / Flexible Tenancy Terms

Co-living is an ideal accommodation option for those who have just moved to a new city, including expats looking for short-term accommodation while in transition to getting a more permanent residence.

Are Co-Living Arrangements Legal in Malaysia?

The Housing Development (Control and Licensing) (Amendment) Act 2012 (HDAA) in Malaysia states that “housing accommodation” includes any building, tenement or messuage which is wholly or principally constructed, adapted or intended for human habitation or partly for human habitation and partly for business premises and such other type of accommodation as may be prescribed by the minister from time to time to be a housing accommodation pursuant to section 3A.

When a developer sells a project for the purpose of co-living, these units should be governed by the HDA (Housing Development (Control and Licensing) Act) 1966. Co-living units are not considered as SoHo units, as the addition of facilities such as bathrooms or nap rooms doesn’t immediately classify a property as an HDA property.

SoHo units are typically occupied or rented out by the unit owners for residential or office purposes while co-living developments are managed by operators who cater to specific groups of people with shared interests and communal activities. This is the biggest difference between the two.

Leaving a Co-Living Agreement

In a co-renting arrangement, all renters sign the rental agreement and are equally responsible for paying rent and taking care of the property. Just like a regular tenancy agreement, there are terms and conditions such as duration and responsibilities that both parties must accept prior to signing.

So, if you’re looking to leave the co-living space, be sure to check the terms and conditions, and the penalties for leaving the space before the expiry of contract.

One of the biggest draws for tenants is flexibility. Leases are often shorter-term compared to the usual rental agreements, allowing residents to move in and out with relative ease. This translates to lower vacancy risks for investors, a crucial factor for maximising returns.

READ: 10 terms and conditions in a tenancy agreement you should look out for

Investing in Co-Living: Pros and Cons

By understanding the risks and rewards, you can make informed decisions about whether co-living aligns with your investment strategy.

Pros

• Potential of higher returns: Co-living spaces can generate higher rental yields per square foot compared to traditional rentals. With multiple tenants sharing amenities, investors can maximise their property’s earning potential.
• Lower vacancy risk: Flexible lease terms appeal to some tenants, especially young professionals seeking short-term stays. This translates to less downtime between tenants, minimising vacancy periods that eat into profits.
• Reduced management hassles: Professional co-living operators handle the day-to-day grind. This includes tenant screening, lease agreements, maintenance issues, and even organising community events. Investors can enjoy a passive income stream with less hands-on involvement.
• Enhanced borrowing capacity: Income generated from co-living properties can have a positive effect on your credit score and standing with financial institutions.
• Catering to changing demographics: There’s a shift in living preferences, especially among young professionals seeking single-room or studio unit accommodations. Co-living properties provide an ideal option for those looking for affordable yet comfortable living spaces.
• Diversification: Co-living spaces can be located in urban, suburban, or rural areas, and can cater to a wide range of demographics. This can help spread risk and reduce exposure to fluctuations in any one market.

Cons

• Higher entry costs: Converting existing properties or building new co-living spaces can involve higher upfront investments.
• Management reliance: Investor success would depend on the competency of the co-living operator. Choose an experienced operator with a proven track record of managing properties, maintaining tenant satisfaction, and maximising occupancy rates.
• Market saturation risk: The co-living market in Malaysia is still young. Thus, investors need to be mindful of potential saturation in certain areas.
• Regulatory uncertainty: The regulatory framework may still be evolving. Investors may encounter challenges navigating regulations, which could potentially impact the feasibility of co-living ventures.
• Tenant turnover: Co-living spaces may experience higher tenant turnover due to the transient nature of residents. Managing turnover can be costly and time-consuming for investors, requiring ongoing marketing efforts, rent negotiations, and unit turnovers to maintain occupancy levels and rental income.
• Financing challenges: Some banks may be unfamiliar with co-living as an asset class, which could make it difficult to secure financing.

Investment Considerations for Different Types of Co-Living Spaces

To make an informed investment decision, investors should consider various factors such as location of the development, the size of the target market, and the demand drivers for the units.

Here are some investment considerations based on profile type:

• Student co-living: High occupancy rates near universities, but tenant turnover can be higher.
• Young professional co-living: Lower turnover, and may require premium locations near business hubs.
• Family co-living: An emerging niche with potential for higher rents, but requires larger units and family-friendly amenities.

Co-Living Spaces in Malaysia

Several co-living operators have established a presence in Malaysia, offering a diverse range of living experiences. Here are some of them, with info sourced from their respective websites.

1. JL Co-Living, USJ 21, Subang Jaya and The Mines, Seri Kembangan, Selangor

JL Co-Living claims to be the first co-living space in Malaysia. It was founded by Jessica Lee in 2018 when she realised there was a lack of communication between housemates, people were becoming more isolated, and safety was a concern in community living.

She wants to enhance community living by providing a space where people can mingle yet have their own personal space. The common area at JL Co-Living has hot desks and beanbags, a bar equipped with a coffee machine, a mini kitchen with microwave and refrigerator, a meeting room, a cinema, a games area, a laundry room, ironing facilities, and free Wi-Fi.

JL Co-Living offers flexible tenancy lengths to suit individual requirements. You can stay with them for a minimum of 1 week to 3 years.

Room types	USJ 21 • Single Room • Twin Room • Premium Room The Mines • Apartment
Room furnishing	6 inch mattress, bed, furniture, full-length mirror, study/work desk and a chair, wardrobe, hangers and a complimentary dental pack
Monthly rental	• From RM450 per month • Up to RM1,000 per month • Excluding room electricity bills • JL Co-living covers the cost for water and common area electricity
Deposit	• 1 month advance rental • 1 month rental • 0.5 months utilities

2. CoLiv @ Damai Residence, Ampang, KL

CoLiv is operated by Tan & Tan Developments, and it is located behind the Grange on Jalan Ampang. The main communal area is called Co-Coon Hub @ Level 19, where you can work, watch a movie or cook a meal.

Facilities at CoLiv include meeting rooms, gym, laundry, communal lounges, printing room, game room, sky deck, co-working spaces, BBQ station, cinema, kitchen and dining area.

CoLiv mentioned that they are the first co-living accommodation operating on a professional scale in Kuala Lumpur. They offer contract flexibility, according to your needs. However, the minimum length of stay is 3 months.

Rooms	• 91 sq ft – 403 sq ft • 6 types of fully furnished rooms with single and double occupancy • Choice of ensuite bathroom or shared bathroom • From RM1,050 per month
Room furnishing	• Fully furnished private bedroom • Utilities included

3. SkyBlox Co-Living, Setapak, KL

SkyBlox Co-Living is developed by SkyWorld Development Bhd, and they’ve marketed it as ‘Malaysia’s first co-living in the park’. Communal spaces include kitchen, laundry, alfresco dining, game rooms, parcel locket, and table tennis. The community also gets access to a 3-acre private park and its facilities.

Free cleaning is provided for the common areas, and the minimum length of stay at SkyBlox Co-Living is 6 months.

Rooms	• 100 sq ft – 175 sq ft • From RM780 • Utilities calculated based on room size
Room furnishing	• Fully furnished
Deposit	• 0.5 month rental • There’s a one-off registration fee of RM350

4. Komune Living & Wellness, Cheras, KL

Komune Living & Wellness sits on a 2.06-acre site next to Taman Tasik Permaisuri, Cheras’ biggest public park. You’ll have access to community spaces like open kitchen and dining, living area and lounge, warm swimming pool, karaoke rooms, games room, jacuzzi, swimming pool, gym, rooftop farm, wellness facilities, and a food hall with more than 12 food stalls.

Other on-site amenities include a Wellness Hub and Senior Care facilities with programmes and services. Their rates are all-inclusive, including utility bills, wifi, regular room cleaning, and usage of facilities. You may choose to stay for a few nights, and there are also long-stay packages for those seeking stays for a month or longer.

They’re also at another location – Komune Living, Bangsar South.

Rooms	• 173 sq ft – 573 sq ft • From RM162 per night. Best available rates differ from time to time. Kindly check their website for current prices.
Room furnishing	• Fully furnished

5. lyf, Jalan Raja Chulan, KL

Ascott Limited opened its first lyf-branded co-living property in Kuala Lumpur in 2023. The 12-storey property has 104 units, and social spaces are located on Level 12.

Amenities include ‘Bond’ (social kitchen), ‘Connect’ (coworking/lounge), ‘Collab’ (Meeting Room), ‘Burn’ (social gym), and ‘Cookout’ (rooftop herb garden and BBQ dining area).

lyf, pronounced as life, is a short distance from the Masjid Jamek LRT station and Raja Chulan MRT station.

Rooms	• 183 sq ft – 560 sq ft • 6 types of rooms • From RM128 per night
Room furnishing	• Fully furnished

6. Bespoke Habitat, Johor Bahru

Bespoke Habitat is a room rental and shared space co-living specialist in Singapore, and they’ve recently introduced its co-living space in Johor Bahru. The 200-apartment co-living space is located near Mid Valley Southkey.

Some of the facilities of the co-living space are functional living areas, fully-equipped kitchens, high-speed WiFi, on-site laundry facilities, concierge customer care service, and weekly cleaning service.

Bespoke Habitat targets to accommodate those who commute cross-border between Johor Bahru and Singapore for daily work. As such, the co-living apartments are in close proximity to the Customs, Immigration, and Quarantine (CIQ) checkpoint. Bespoke Habitat also provides daily transportation services to facilitate the travel.

Rooms	From RM800 per month
Room furnishing	Fully furnished

Here’s a list of other co-living spaces in Malaysia

1. Upstairs Downstairs, Bukit Bintang and Kampung Pandan, KL
2. Utopia, various locations
3. Wetopia, various locations
4. Sleepy Bear, various locations
5. The Hatchery Place, USJ 11, Subang Jaya
6. The Bed, KL Plaza, KL

Generally, co-living is most in demand in central locations which are typically more expensive. The co-living trend is expected to grow further, so there are opportunities for property owners to turn their properties into co-living spaces with co-working facilities to generate rental income.

Co-living is a compelling alternative for property investors in Malaysia. However, as with any type of property investment, thorough due diligence is crucial. Research the market, partner with experienced operators, and choose the right co-living type for your investment goals. With a calculated approach, co-living can be a positive addition to your property portfolio.