Dominik Wiesent – Director of Investment Hmlet Hong Kong
We sat down with Hmlet’s Dominik Wiesent. Dominik’s role as Director of Investment puts him in a unique position to shed some light on the co-living segment in Hong Kong. In the interview, we cover his entrepreneurial journey from co-founding ‘we r urban’ to its acquisition by Hmlet in August 2018, find out about success factors in this market segment and learn what makes a great co-living space. Dominik also shares his views about the Hong Kong market and leaves us with a fantastic tip – a free online resource to the distilled knowledge of over 250 books of the brightest thinkers of our time.
What inspired you to create we r urban?
I started we r urban back in 2016 with two partners. Cornelius Kistler was based in Switzerland while Raphaela Oliver was in Hong Kong. Being a student in Hong Kong Raphaela knew first hand, how difficult it is to find beautifully designed, affordable accommodation in a good location. She shared her experience in the world’s most expensive real estate market with me and this became the blueprint for our company we r urban. Cornelius saw an investment opportunity, and I saw a chance to help them scale the business. When Pauline Wetzer joined us as a partner in 2017 we were able to streamline processes and grow organically as we found product-market fit.
How did you get your current role at Hmlet?
Ironically, one of our we r urban tenants (and still our Hmlet member today) sent us a news article about a Singaporean company engaging in a similar kind of business. We cold-messaged the founder and CEO of Hmlet, Yoan Kamalski, and arranged a call to get to know each other. During the call, we found that we had some friends in common and discovered that the potential synergies between the two companies were huge. After we visited each other and saw that our values and visions were aligned, it was only a matter of time for us to combine forces. Hmlet raised their seed round and launched one of their largest properties in Singapore Hmlet Portofino, just before they acquired we r urban in August 2018.
Why Hong Kong?
Hong Kong has always been a landlord-dominated market with limited vacancies and ever-rising rents. However, affordability is not the only problem. Neglected maintenance, the lack of support and services to upkeep, and enjoy residential properties, as well as the language barrier between foreign young professionals and local landlords, can lead to terrible tenant experiences. Having experienced all of this myself in my first studio flat on Hollywood Road, I had no doubts that Hong Kong will be the ideal market to start our business.
What is the concept behind Hmlet?
The experience that Hmlet delivers is flexible, convenient, and hassle-free. We are also a two-sided property & lifestyle platform. On one side we’re assisting Landlords to add value to their distressed assets by providing modern renovation concepts, furniture as a service, and lease management. The landlord of Tsing Fung Street 17 in Tin Hau, a 27 Bedroom building which we’re just about to open in July 2020, decided to make use of all those services combined and signed a Management Agreement with Hmlet after renovating the distressed residential building according to Hmlet design standards. On the member side of the platform, we are providing a hassle-free and tailored living solution. With our app, members can conveniently order everything from laundry services, extra room cleaning, and event bookings. We also handle all billing and support matters and offer an “in-app chat” function for easier communication between flat-mates. In this way, the on- and off-line experience complement each other to create a truly new defined rental experience. (Hmlet app: AppStore / GooglePlay)
How do you choose a location for Hmlet?
A Hmlet location needs to be convenient and in line with our brand standards. It should be located ideally less than 25 minutes by public transport from Central.
When you are redeveloping a Hmlet space, what do you do to make your renovations more sustainable?
We’re always encouraging the landlords we work with, to think long term. In Tsing Fung street for example we’ve chosen a concrete floor that is not only maintenance-friendly but will also last for decades. Solid wood furniture complement the design scheme and those items don’t lose their value after 1 or 2 years. They can simply be sanded down and will look brand new after a fresh layer of health-friendly lacquer.
It seems the main drivers for co-living are the low rental fees opening a new segment of the property market. Do you think the concept is also applicable to already existing segments, e.g. higher-end pricing and affluent tenants?
Serviced apartments and hotels cover most of the demand for the higher-end affluent segments of the market, especially since the government grants attractive tax incentives for high housing allowances in hotel rooms. But this doesn’t mean that this target group won’t have the desire for meaningful community engagement and a broader sense of belonging besides their work-relationships. So having a community-centered building complex with great communal areas and extended services like professional child-care, will definitely be something that could set a developer apart from their competition and attract high-income families.
There are many co-living spaces in Hong Kong, what makes Hmlet unique?
With more than 50 locations and a great product variety, Hmlet offers a unique footprint in the central and western districts of Hong Kong Island. Whether it’s a private apartment or a room in a shared apartment, new arrivals will find their ideal space. But even more importantly, the right flatmates. I’m for example still in touch with almost all of my former flatmates from back home in Germany and Switzerland. Sharing an apartment with someone allows you to build friendships that can last a lifetime. Hmlet is curating its places in a way that private individual spaces like en-suite bedrooms are connected to communal areas which are only shared among a small intimate group of people.
Co-living is still a relatively new trend in real estate which closely follows the co-working trend. Do you think the current consolidation in the co-working space will be also seen in the co-living space? If so, which players do you think are best positioned?
Diversification is very important, particularly in turbulent and uncertain times. Therefore Hmlet is not only well positioned due to its asset-light management and platform model, but also due it’s positioning in APAC. Being present in 4 countries and having more than 1500 rooms across Singapore, Australia, Hong Kong, and Japan give us a unique market advantage for further growth. I do think that many of the offerings in the market that may have only been riding the “trend-wave” by branding their buildings as co-living, may soon return to the more traditional descriptions of what they offer: Hotel-rooms and serviced apartments. Even though saturation levels in co-living are still far from what we’ve seen in the co-working landscape, I see a risk that the steep drop of tourist arrivals in Hong Kong will put more pressure on lower-class hotel owners to enter the long-stay room-rental market. This could increase the room-count of available rooms significantly and fuel the competition in the mid-term oriented co-living segment. But once the so-called ‘travel bubbles’ will open in the upcoming months and political stability can be ensured, these hotels may prefer to offer short term accommodation for tourists arriving from Macau, Mainland China, and other Southeast Asian countries that show very few or no new infections.
What are the elements of co-living spaces tenants value/demand the most?
They value flexibility, comfort, design, and human touch. The usual hassle of sharing an apartment always arises out of someone not fulfilling their unpleasant duties. We do take all of those aspects away from our members, which allows them to explore and do more in their leisure time. Hiking or going to the beach with friends is way more fun on a Sunday than cleaning and laundry. Especially if you’re only in Hong Kong for a couple of months.
Hmlet emphasizes community building. Is there a minimum size a co-living space must have in terms of the number of tenants or in terms of minimum period of stay to foster community building?
Our minimum stay in Hong Kong is 1 month. However, the average time our members stay with us is much longer than that. I would dare to emphasize, that community may not necessarily be something that our members are willing to pay an upfront premium for, as it’s a soft-factor and before you experience it you’ll never know what you will get. But it certainly makes the product sticky. Once you found a great circle of friends within Hmlet and you can connect with other like-minded people during our community events, you may just extend your stay and enjoy the comfort that a Hmlet home can offer you. We do organize the majority of our events outside of the actual Hmlet living spaces. So there’s no direct link between the minimum size of one shared space and the creation of community as long as there are clusters in every district you can fall back on. These clusters allow members to join community activities and connect in a nearby coffee shop, even outside our event schedules.
How do you create a community, and how does this look like in the current Covid-19 climate?
It’s a challenging time for everyone, especially those who are eager to meet and connect like the majority of our members. We are coping with the situation by taking as much as possible online and trying to engage members with cool classes and events you can attend remotely. We’ve held quite a few virtual events, from yoga sessions, cooking classes as well as DJ nights.
When you think about property development in HK, what do you want to see in the city?
There is a positive side to everything, so I think in general a market correction was due as many people in the middle-class income segments did face to get pushed out of the city center or had to accept substandard living conditions. So I hope that we’ll see an increase in maintenance expenditures and a prolonged life or even preservation of some heritage and older low-rise buildings due to the slowdown of new developments. Big developers will counter the current drop in buying and selling prices with a slowdown of new supply. Unfortunately, this will contribute to ending the dream of a more balanced tenant- and landlord-market in the long run as an imbalance between high demand than low supply has to be expected. I wish to see more innovation in the years to come and expect new concepts in the area of living, working, and playing all under one roof. I’m also still waiting for the first purpose-built co-living building in Hong Kong, as we’ve so far only seen renovation projects.
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