Covid-19 impacting sharing economy

PETALING JAYA: The novel coronavirus, or Covid-19, is not only making a mess of companies in the hotel and aviation sectors but is also upending members of the sharing economy.

Be it work or leisure, the virus is raising doubts about the sustainability of sharing spaces among strangers. Industry players have different views.

Over in the house-sharing space, things are coming to a head. An operator of more than 50 units of non-hotel shared accommodation in the city is throwing her hands in surrender as a result of Covid-19.

Declining to be named, she said her company gave owners a fixed income irrespective whether their unit is rented out or not.

But rent had dropped drastically. A one-bedroom unit that could command RM200 to RM260 a night has been halved. A two-bedroom, previously between RM300 and RM500, is going for RM150 today.

A three-bedroom unit is only able to bring in RM250, compared to RM400 to RM1,000 previously. Even then, there is little demand.

But owners continue to demand their fixed monthly income. “Some have offered to waive the fixed monthly amount we give them. Others insist on getting the full amount and said it is part of our business risk. But we also pay for the utilities and monthly maintenance of these units, ” she said.

If the situation is not resolved soon, they would have to find long-term tenants, she said.

Unlike hotels, which are regulated, non-hotel accommodation is not. Malaysia has 3,225 hotels offering 257,195 rooms as at Sept 30 2019, according to the National Property Information Centre (Napic).

According to a July 2019 report, AirBnB had over 53,000 listings and was among the fastest growing in South-East Asia. The same report said the platform welcomed more than 3.25 million guests in Malaysia over a 12-month period starting July 1,2018.

It is a competitor to the hotel industry, except that in both sectors, guests are drying up today and those who do turn up are viewed with a certain amount of concern because of the highly infectious Covid-19. There are other platforms offering similar services.

As a result of Covid-19, AirBnB is giving guests the option to cancel reservations with a full refund.

Malaysia’s courtship with AirBnB and similar platforms had its beginnings with the property binge, which started a decade ago when investors entered the market due to easy credit. Unable to rent, or sell at a price they want, many joined the sharing economy in order to help cover their monthly instalments instead of keeping the units empty.

According to Napic, as at latest third quarter of 2019, Malaysia’s stock of serviced apartments totalled 240,319 while small office home offices (SoHos), 38,134. Going forward, there is an incoming and planned supply of about 300,000 units (116,211 plus 181,609) of serviced apartments and 45,000 (26,998 + 17,480) SoHo units in the country.

In the high-rise residential segment, there is an existing stock of 1.23 million units with an incoming and planned supply of 361,307 units.

Ben bought a serviced apartment in the shopping district of Bukit Bintang in the city. He put the unit on a non-hotel accommodation platform the past year.

Pre-Covid-19, it was rented 10 out of 30 days at RM200 a night. Today, zero. He is seriously considering seeking out a long-term tenant. If he does that, he will not be able to go and enjoy the place as and when he likes. “The problem began when owners begin to ‘throw prices’.”

Safe as houses, they say. Not when there is an oversupply, with or without a pandemic. And that applies to office space too.

According to property consultancy corporate services executive director Teh Yong Khean, co-sharing office space will continue to gain traction among freelancers, start-ups, entrepreneurs and those seeking representative offices.

He said that not having to fork out money to fit out a traditional office and being able to downsize or grow are two main attractions.

“By 2025, Millennials will account for about 75% of the global workforce. They appreciate flexibility and it is part of a lifestyle for its networking and collaborative opportunities, ” Teh said.

He said the trend today is for larger enterprises to maintain their main offices while opening smaller offices elsewhere using co-working space. However, over the short term, revenues or income from membership fees and events will be hugely affected.

He estimated there are 1.4 million sq ft of co-working space in purpose-built offices in the Klang Valley, excluding those in malls and shoplots.

Developer Metro Homes Bhd managing director K.L. See offered a different view: “This trend targets the young. Young people like this lifestyle because it provides a space to meet with, maybe, Monday breakfast thrown in. It is like a social sort of thing.

“But at the end of the day, what sort of rates do these co-working operators charge? Will the occupancy pick up? The moment a tenant is established, he will want his own permanent space, ” See said.

Source: TheStar