Co-living: The future of boarding house business?
Written by Ardela Nabila | Read in Indonesian
For most Indonesians, becoming a boarding house (indekos) owner is one of the most promising retirement plans. That is because boarding houses are still the most popular choice of residence in Indonesia, especially among migrants.
The culture of living in a boarding house has actually existed since the colonial era. Boarding houses were used by the upper middle class natives at that time as a means to elevate their social status to be on par with the Dutch.
They were entrusted to Dutch families, paying a certain amount of money and fulfilling certain conditions. The Indonesian term indekos is a loanword from Dutch "in de kost" which means "eating in" or "living and eating in".
The indekos business now has an elevated version called co-living. Both offer rental accommodation, but co-living carries a more modern concept that fits the lifestyle standards of today's young people.
This type of accommodation is popular among Millennials and Gen Z because it offers community-based housing with supporting facilities that are more complete than conventional boarding houses. Its popularity is also driven by the rising and increasingly unaffordable property prices.
A survey of 1,194 respondents titled "Property Perspective from Gen Z" released by Jakpat in 2023 showed that the majority of Gen Z prefers renting property to buying it for financial readiness reasons.
36% of the 587 respondents who were reluctant to buy property stated several reasons why they chose to rent, namely cheaper prices (22%), strategic location (18%) and job transfer (11%).
Amidst the problems related to housing and the increasing living standards of young people, co-living is seen as a solution for housing in the city centre with adequate facilities and at affordable prices.
Building a popular co-living business
Co-living is a community-based housing concept that allows residents to share private and public spaces. The term co-living has become popular among young Indonesians, especially those living in major cities, since the pandemic.
Over the past few years, the co-living industry has been witnessing the emergence of many new players to meet the needs of Millennials and Gen Z. One of the most familiar names is Cove, which can be found in almost every corner of Jakarta. (Documentation by Cove).
Cove is a Singapore-based co-living provider which was founded in 2018 and expanded to Indonesia in 2020. In less than four years, Cove has managed around 150 properties and more than 3,500 rooms in Indonesia.
This proves the high enthusiasm of young people in new housing concepts that can support their modern lifestyle.
"If we talk about co-living, actually when Cove entered [Indonesia], the term [co-living] was still strange and foreign to the public. They only knew boarding houses or apartments, they didn't know what the co-living business was. But in the last five years, the co-living industry has shown significant development with many people starting to be aware and familiar with this concept," said Cove Indonesia Brand Marketing Manager Citra Rufina Praditha in an interview with TFR, Wednesday (14/8).
Having the opportunity to live in the city centre with exclusive supporting facilities and affordable prices is the main factor driving the popularity of co-living.
"Those who live in Cove have a fairly dynamic lifestyle and need flexibility. Why can the co-living business grow? Because the concept it offers is in line with the rising living standards of urban society."
Compared to apartments or boarding houses, co-living residences do have their own appeal. This is because the monthly rental fee includes a fully furnished room and other supporting facilities, starting from communal areas, shared kitchen, parking space, WiFi access, room cleaning services and maintenance services to customer service.
"The concept is sharing, but the facilities are available to all residents. Co-living is also located in strategic locations. With these adequate facilities, compared to buying a house, co-living becomes much more affordable."
Challenging, but rising!
Not only in Jakarta, Cove has also expanded its presence to other metropolitan cities in Indonesia which are dominated by Millennials and Gen Z. Today, Cove is also present in Tangerang, Depok, Bekasi, Bandung and Bali.
Continuing to expand due to the high demand does not mean that developing the business is hassle-free. The reason? The majority of Indonesians still consider the cost of a product or service before making a decision.
The competition of a co-living business is not luxurious and premium rental housing like apartments, but conventional boarding houses that can be found everywhere and offer relatively pocket-friendly prices for most workers in big cities like Jakarta.
"The main challenge is the many choices of cheaper accommodation, because our society is very price sensitive. Another challenge is public perception that co-living is expensive. Actually, behind that price are supporting facilities that people may not know about," Citra explained.
However, the co-living business in Indonesia is predicted to move in an upward trend. Along with the increasing urban population in Indonesia, more and more property owners are becoming aware of this business opportunity.
However, business players must strategise and continue to increase public awareness of this relatively novel accommodation option.
"Our journey time is quite long to try to explain what we offer. We utilise communication on marketing channels, such as social media and brand messages, to introduce co-living to the public," said Citra.
Ensuring that tenants get the experience they expect is also important to grow the co-living business. In addition, co-living providers must be able to adapt to market developments.
For example, in addition to offering monthly rentals, Cove now follows market demand and provides daily or even weekly accommodation.
"We also have to walk the talk, to be able to deliver [the] commitment by providing an experience according to consumer expectations. Another strategy is how we can continue to be adaptive. At Cove, initially we only took the concept of monthly co-living, but now we are more flexible to meet the diverse market needs. These are some strategies that could make us successful in the co-living industry," she concluded.