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[SINGAPORE] Demand from foreign students – especially from China – is fuelling growth in Singapore’s co-living sector, where the market is maturing and returns are moderating, a report by property consultancy JLL showed.

Foreign students now account for 25 to 40 per cent of residents for some co-living operators, noted JLL. “Particular growth has been noted from Chinese student tenants in the co-living market.”

As at June 2023, there were 70,800 international students in Singapore, the report noted, making up 4 per cent of the non-resident population and forming “a substantial portion of enrolment” at Singapore’s top educational institutions, including the National University of Singapore and Nanyang Technological University.

The report added: “Intensified post-pandemic recruitment supports projections of 6.7 per cent compounded annual growth rate (CAGR) for the higher education market from 2025 to 2031.”

“The expanding international student demographic, alongside broader non-resident population growth, directly drives increased demand for rental accommodation and co-living spaces,” said JLL.

The broader non-resident population, meanwhile, makes up 30 per cent of Singapore’s total population and grew 5 per cent year on year through June 2024, maintaining a five-year CAGR of 1.1 per cent.

There is also stronger government support today for co-living development. Various state properties have been repurposed for co-living use, with demographic-specific projects for healthcare workers and students.

Institutional investors are drawn to the steady demand and growth fundamentals of the co-living sector – but moderating returns and rising costs are tempering expectations, JLL said.

According to JLL’s market report published on Wednesday (Sep 17), co-living investment volume in the year to date exceeded S$200 million. In 2024, such transactions totalled more than S$800 million, and amounted to around S$200 million each in 2023 and 2022. 

Since 2023, “multiple transactions of existing co-living properties have crystallised with several others being marketed for sale based on JLL’s understanding”, as early investors move to recycle capital.

But most transactions involved the conversion of existing assets – including hotels, offices and hostels – to co-living properties, JLL said. For instance, CapitaLand’s lodging unit Ascott reopened the former Hotel G as lyf Bugis in August 2024, after acquiring the freehold hotel for S$240 million in January that year. 

The consultancy also noted the emergence of “en bloc conversions”, with investors repurposing older private condominiums into co-living spaces. 

The Bayron by Cove was among the first such conversions, turning 63 private homes into 304 co-living rooms. The freehold condominium in District 9 was previously launched for collective sale at a guide price of S$376 million in March 2021. 

Cove operates under a long-term master lease with the property owner, Baron Albert, an entity linked to the estate of late businessman Chee Teng Hee and the Chee family. This partnership model allows the two to share the investment costs and rental upside, said JLL. 

Since The Bayron by Cove’s launch in November 2024, around 48 per cent of tenants have been students and the remaining 52 per cent working professionals. Most tenants are under 30, coming primarily from China, France, Italy, the US and Singapore. 

Robust demand

The top five operators – LHN’s Coliwoo, Cove, Habyt, CapitaLand’s lyf, and The Assembly Place – account for around 65 per cent of total stock as at Q2 2025.

Room inventory has grown 17 per cent between 2023 and 2025. 

Capital players in Singapore’s co-living market include private equity firms, developers, family offices and high-net-worth individuals (HNWIs), institutional investors and specialised operators, with the majority – 81 per cent – based in Singapore.

A survey of investor intentions also showed that investment timeframes have extended, with the recognition that co-living assets require longer stabilisation periods for optimal performance. But the majority of investors surveyed by JLL – some 77 per cent – still prefer three-to-five-year holding periods.

Investors polled have also recalibrated their expectations of returns, JLL said.

A majority of 65 per cent now target internal rates of return (IRRs) of below 15 per cent, whereas in 2023, 52 per cent of investors sought returns above 15 per cent. The shift in expectations “reflects the sector’s evolution from a higher-risk asset class to a more institutionalised investment category”, JLL said.

Despite growing investor confidence, the sector faces several challenges. 

Economic headwinds and evolving government policies could affect Singapore’s appeal to young foreign professionals, and in turn influence demand and occupancies, said JLL. 

Operators also grapple with a limited talent pool for specialised roles and rising operational costs, especially in staffing and utility.  

“The availability of suitable properties for conversion remains limited while acquisition costs continue to escalate, creating barriers to operator expansion,” JLL added.