Hmlet, a Singapore-based startup that leases spaces and sublets them to long-term tenants, is undergoing its biggest overhaul yet.
The co-living operator will no longer directly rent, renovate, and operate properties. Instead, it’s going “asset-light” by helping landlords run Hmlet-branded co-living spaces, the company’s co-founder and CEO, Yoan Kamalski, tells Tech in Asia. This echoes the approach that Oyo and RedDoorz have taken in travel accommodation.
The shift comes at a cost. Hmlet had retrenched around 10% of its employees as their roles had become redundant, says the CEO.
Hmlet isn’t planning to shrink its headcount, however. As of end-2019, the company had 198 employees, Kamalski says. Indicating its postings on various jobs platforms, he adds that the startup is “hiring a lot more than we’ve had to let go.”
Hmlet seems comfortable in terms of cash flow. It raised a sizable US$40 million round in July last year from the likes of Sequoia Capital India, Japanese real estate developer Mitsubishi Estate, and VC firm Burda Principal Investments.
“We’ve no plans to fundraise,” Kamalski says. Without detailing financial figures, he adds that the startup expects to grow its tenant base by 3x this year compared to 2019.
The average tenure of its members – spread across Singapore, Hong Kong, Sydney, and Tokyo – is 13 months.
High upfront costs
Sources tell Tech in Asia that part of the reason for the pivot may have been the high upfront and ongoing costs that come with leasing, managing, and sprucing up properties.
A Hmlet spokesperson, however, views “[the leasing] model as highly scalable yet sustainable” despite the high operating costs. He insists that the model could be profitable if the startup wants it to be.
Nonetheless, Hmlet’s management had thought about winding down rental contracts since 2018, though it only pursued the platform approach toward the end of last year. Now, it plans to make money through revenue-sharing arrangements with property owners.
“To be able to disrupt real estate, we had to move away from contracts and tenancy agreements,” says Kamalski, adding that landlords don’t often interact with tenants – there’s a middle layer of property agents, interior designers, and contractors.
“The real goal is not about creating arbitrage [through subletting], but empowering landlords to have direct connection to the customers,” he says.
To this end, Hmlet is expanding its engineering team to build a new portal that will offer landlords access to services, including data on tenants, to help them run their own accommodations.
The CEO declined to share more details about its new service for now, so it’s unclear how it’ll differ from other property tech endeavors.
Hmlet is sure to run up against KoolKost, a co-living spun off by RedDoorz that’s active in 100 properties across 14 cities in Indonesia.
Property owners in KoolKost’s pilot project saw an average increase of 30% in room occupancy, the company claimed. Oyo also has a co-living arm, called Oyo Life.
Kamalski, meanwhile, compares his new approach to Netflix.
“Movie producers were producing blockbusters not knowing if it would be a success,” he says. Netflix is changing that by using data on consumer behavior to dictate the type of content they acquire.
“It’s a very similar thought process for living spaces,” the founder adds.