Singapore’s LHN Adds to Co-Living Portfolio with District 9 Acquisition

LHN Group has agreed to acquire a pair of mixed-use buildings in Singapore’s District 9 for S$23.25 million ($17.4 million) in a bid to retain its lead in the city’s co-living market.

LHN’s co-living division has taken options to purchase the pair of four-storey retail and residential buildings at 286 and 288 River Valley Road from a pair of private individuals, conditional on the existing owners consolidating the adjoining properties under a single title, according to a disclosure to the local bourse on Wednesday.

The SGX-listed firm said it plans to convert the properties, which span 11,600 square feet (1,078 square metres) of built area near the Fort Canning MRT station, into a serviced residence or hotel under its Coliwoo brand as it grows its rental residential business in the city-state.

After a series of acquisitions over the past year, LHN’s portfolio, including operational units and future pipeline give the company around a 20 percent share of the city-state’s co-living sector,  according to a JLL report in June, and make it the largest player in a segment which is expected to grow by up to 3,000 rooms within this year alone.

More River Valley Options

LHN is paying about S$2,004 per square foot for the adjoining properties, or slightly below the S$2,069 per square foot rate under the seller’s S$24 million asking price for the buildings when they were first put on the market by CBRE in August 2020.

The developer said conditions including the termination or reversal of the strata subdivision of the freehold River Valley properties must be met for the deal to close, which is expected to take place by December. The vendors, Rosy Wang Eang Wah and Lim Siew Yin Rona, also need to terminate existing tenancies in the properties, some of which are not set to conclude until 23 February 2024.

The firm also needs to secure approval from the Urban Redevelopment Authority to officially change the use of the properties to permanent serviced apartment or hotel use.

Should the acquisition go through, the soon-to-open Coliwoo location will add to LHN’s offerings in the district with the company scheduled to open a branch within the same block at 298 River Valley Road within this year, after purchasing that property from UOB last year for S$8.5 million.

Its new pair of River Valley Road assets are currently zoned for commercial use on the first floor, while the upper three levels are for residential use where the properties currently rent at rates from S$1,600 to S$4,200 per unit per month.

In a notice published last February, Singapore’s URA rejected an earlier proposal to change the sites’ zoning to hotel use and proposed, as an alternative, that the properties be rezoned for retail space on the first floor with serviced apartments on the three upper levels, provided that the existing strata titles are terminated and consolidated into a single title.

The properties are located within the prime District 9 residential area and are around 10 minutes’ walk from Fort Canning Park and Robertson Quay.

Co-Living on the Rise

At the time that it launched its 411-unit Coliwoo Orchard flagship location earlier this year, LHN estimated that it would be managing about 2,500 keys across its serviced residence and hotel properties by the end of the year as it expands its rental residential business.

With the company rolling out new co-living properties, LHN booked S$10.5 million in revenues from the division for the six months ended 31 March, which was up 50 percent from a year ago, according to a business update in May. Fair value losses on its investment properties, however, weighed on the company’s bottom line, bringing net profit attributable to equity holders down 47 percent to S$16.9 million from S$32.2 million during the same six-month period last year.

Now LHN is looking forward to still more income from its rental housing division.

“The newly launched 22-storey Coliwoo Orchard property at Mount Elizabeth Link is expected to contribute significantly to the Group in (the second half), along with multiple new Coliwoo properties, including those at 298 River Valley Road and 404 Pasir Panjang, both expected to commence operations in (the second half),” the firm said in its May update.

In its report, JLL named River Valley Road as among the most popular locations for co-living properties in Singapore due to its proximity to the central business district. The consultancy said that with housing prices in Singapore among the least affordable globally and interest rates rising, more professionals are turning to co-living as a temporary alternative to home ownership.

With housing rents in the Little Red Dot up by 42.5 percent in the past two years, renters have also seen the co-living sector offering more affordable and flexible leasing options compared to conventional rental homes, JLL said.

“The rise of the co-living sector reflects a broader shift in societal attitudes towards living arrangements and homeownership,” the property agency said. “As more people prioritise flexibility and personal lifestyles, co-living is likely to continue to grow in popularity as an attractive option for singles and couples alike.”