Pandemic-stricken hotels have attracted investors for conversion into co-living properties, Chow says. Central-located tenement buildings with attractive prices offered by distressed landlords also lure investors. For example, Lofter has teamed up with Singapore-based SC Capital Partners to acquire such aging buildings for HK$418 million ($53 million; $50 million) for residential conversion.
Co-living’s stable rental income and high occupancy rate of over 95 percent have driven private equity funds’ interest for value-add opportunity. Last November recorded three deals by foreign funds. Chow comments: “We haven’t seen such active investment for a long while.”
With long-term income yield of about 3.5-4 percent, co-living redevelopment property is “core” for private fund investors as part of asset diversification in Asia-Pacific, says Alvin Leung, director of investment management at Lofter. A number of co-living operators have partnered with foreign funds for investment aiming at long-term stable cashflows, instead of short-to-medium term capital gain.