The Assembly Place, a co-living and start-up in Singapore, announced that it had raised $5.55M in seed funding. It was led by Eric Low See Ching. Low, the second largest shareholder of Oxley Holdings, a Singapore-listed property company, is also its deputy CEO.
Belgravia Ace unit for sale featuring 3-storey 100 strata terrace houses and 18 strata semi-detached houses in a perfect ambience.
Low is the cornerstone investor. There are over 10 angel investors in this round. Many of them are well-known figures in the realty sector. Kemmy Tan is the CEO of M+S which is a joint venture between Malaysian Khazanah Nasional (Singapore) and Singapore’s Temasek Holdings. Ismail Gafoor is CEO of Singapore’s largest property agency PropNex. Wendy Tang, group managing direct of Knight Frank’s international property consultancy Knight Frank. Bruce Lye, Ken Low, managing partners at SRI, and Shaun Poh, Cushman & Wakefield’s executive director capital markets, Cushman & Wakefield, Cushman & Wakefield, Cushman & Wakefield, Cushman & Wakefield, Cushman & Wakefield, Cushman & Wakefield, Cushman & Wakefield, as well as well as well as Shaun Poh and Cushman & Wakefield’s, Cushman & Wakefield’s, Cushman & Wakefield, Cushman & Wakefield,
Entrepreneurs such as Dennis Goh (co-founder and executive chair of Lyte Ventures’ finance platform) and Sean Tan (group legal advisor for Technovator International in Hong Kong and director of True Group – one of Asia’s largest fitness and wellbeing groups) are other investors.
Eugene Lim, founder and CEO of TAP, said that the seed funding will enable TAP to accelerate growth, increase its market share and develop its technology platform. Lim served as director of marketing at Oxley Holdings, where he was for five and a half years. He resigned in July to devote his time to TAP.
Lim is new to fund-raising and only began approaching his contacts a month ago. Lim says that many of the people he approached wanted to get to know him, as he had just left Oxley to start his own business in the middle of the pandemic. “I was surprised and touched to discover that 90% of the people I met believed in me, and were willing to invest in my business.”
Oxley’s Low is more than a cornerstone investor. He is also chairman of TAP’s newly created board of advisors. Tan of M+S and Knight Frank’s Tang, as well as Lyte Venture’s Goh, are the other members of the board.
Low was an early supporter of TAP. He contributed some of his personal assets to its co-living spaces portfolio. After deducting property management fees and exempting capital expenditure, he estimates that his yields on the same assets have increased by more than 30%. Eugene adds that he has made the firm an asset-light operator. This is unlike co-living companies that take up straight leases.
Asset enhancement through the “Social Experiment”
Lim says that TAP was founded purely as an investment venture and as a “social experiment”. In May 2019, the first asset was secured: a house in Jalan Elok, near Mount Elizabeth. Lim’s friend had told him about the difficulty of renting out his house at $6,000 per month. Lim saw an opportunity to improve the asset. Lim negotiated a $5,500 monthly rent with his friend and used some of his own funds to renovate the space. Within two weeks, all six rooms were rented out.
TAP currently has over 350 rooms in Singapore, with another 200 in the pipeline. TAP has approximately 95% of its rooms under a 5-plus5 year management agreement with the property owner.
TAP currently manages assets worth more than $250,000,000. Most of these assets are owned by wealthy individuals and their families. TAP will pay for any asset enhancements or capital expenditures in fitting out the properties to be co-living spaces. This allows TAP to be called “an asset-light operator”.
TAP has been able show these asset owners higher than average returns in return for their assets compared to straight lease models. Lim says that residential yields range from 2.5% to 3.3%. “But, over the past 2 1/2 years we have shown that coliving can increase rental yields on these assets by about 4% to 5.5%.
These returns have attracted more asset owners to join the TAP team. TAP announced that it has secured four additional buildings as part of a 5-plus-5 year management contract. A 171-bed co-living hostel will be one of the key assets. It is located at 25A Perak Road. This is the refurbishment of Footprints Hostel. The three other assets will be repositioned to include residential and serviced apartments. These properties can be found at 3 Tank Road (15 Penhas Road) and 272 East Coast Road. Lim notes that the four assets will bring TAP’s portfolio up to 550 rooms in 16 co-living assets. Lim also noted that TAP is on track for 1,000 rooms by 2Q2022, with 16 more purpose-built assets.
PropNex’s Gafoor, a multi-asset owner and a veteran in real estate, saw the potential for the business right away. He says, “TAP’s business caught my attention.” He was able to see how it increased the property owner’s assets. He says that Eugene Lim, aside from the concept, is “a person who gets things done once they set their minds to them”.
SRI’s Lye, who has known Lim since Knight Frank, is also convinced by Lim’s leadership. Lye introduced Lim to some of his clients who were high-net-worth about 1 1/2 years back. He explains that they own whole blocks of buildings. Lim was able to reposition the assets and increase their yields.
Lye sees the growing trend of millennials in Singapore and Generations X and Y leaving their parents’ homes. Most people in Singapore stayed with their parents until the time they were married. He says that the pandemic and WFH (working at home) have caused many people to want to leave their parents and move into their own homes. Many rent in central locations to be near amenities, entertainment, and their work place. He adds that they may go back to their parents’ homes on weekends. “But most people are happy to have their space. This trend will continue.
Accordingly, Lye believes TAP’s market share will continue to grow. Lye says that TAP will likely be a market leader within the co-living industry. “I believe it’ll be a unicorn some day,” Lye said.
Knight Frank’s Tang says that property management and renting out rooms within a residential property are traditional real estate businesses. She notes that Lim gave it a new twist by creating a co-living model. Lim and his team are able to “continually adapt and innovate”, she says.
Cushman & Wakefield’s Poh initially believed that co-living might not work in Singapore because of the high homeownership rate. He says that co-living could be feasible in major Japanese cities, such as Hong Kong, where the apartments are smaller and people are more used to renting.
After listening to TAP’s business model Poh realized that it serves a niche: “The young, entry-level, or mid-tier white-collar executive from Malaysia and other countries who come here to work”. He explained: “They are the sandwiched group with incomes between $3,000 and $5,000 that have difficulty finding affordable accommodation, particularly if they rent a room.”
Lim recognized the need for affordable rental housing nine years ago. This was in his role as Knight Frank’s head of project marketing. His Malaysian colleague used to arrive at work every day in rumpled clothes. Lim, who is well-groomed and always looks good, inquired about his colleague’s wardrobe. He was shocked to learn of the Harry Potter-style accommodations of his colleague: a bomb shelter in an apartment he paid $500 per month. He had previously rented the utility room in a public housing apartment.
Affordable accommodation that offers privacy and space
Lim can now live in the same kind of accommodation as his Malaysian counterpart with TAP. TAP’s most popular property, Mill@32 in Lorong 32 Geoylang has attracted many young people, most of them from Malaysia. Lim says. The property has 150 rooms and rents for $1,200 per month for a room with shared bathroom.
James Wong is one such resident. He is a music teacher at a Singapore pre-school. Wong, a Malaysian, moved to Mill@32 in August 2013 with his girlfriend. Wong signed up initially for three months and then renewed for one year. He plans to renew his contract for another year.
Model of ‘Pay as you go’
Coliving is a great option for Singaporeans whose homes were delayed due to Covid-related disruptions. Kim Chuan, a technie at Amazon, is one example of such homeowner. Kim says that her condo at Parc Botannia was twice delayed.
TAP’s coliving space at 96 Owen Road is where the 35-year old will be staying until he receives his keys to Parc Botannia. He loves that 96 Owen Road is pet friendly, so he can bring his dog to the co-living area. He enjoys the privacy and the possibility to meet other people in the shared area.
True Group’s Tan noted that people don’t want to be tied down for two- to three-year fixed memberships. He says that boutique gyms have been adopting a pay as you go model in recent years. This appeals to young people. That’s how TAP prefers to do business.
Tan believes that co-living is a growing business. Co-living operators were worried about occupancy being affected by the closure of borders in the first months of the pandemic. They mainly catered to expatriates.
Even Lim has witnessed a shift in demographics. In his early days, 90% of Lim’s members were foreigners. Singaporeans made up only 10%. TAP members today include 30% Singaporeans.
This business is certainly gaining traction. M+S’ Tan notes that while asset-lighting is important, the business has also achieved high retention rates. This high retention rate has been maintained by the programming and partnerships that M+S has made with other service providers to serve members.
Lyte Ventures’ Goh loves the fact that TAP “built a great company very quickly with many of their users rating it highly”. Goh, who founded social media platform Hungrygowhere and financial platform Lyte Ventures, says, “I know how difficult it is to create good brands.”
Goh adds that TAP’s rapid growth and foundation have given him great confidence. Lim says that TAP’s goal is to be a dominant player in Singapore and the region.