Co-living is gaining a foothold, especially in places with expensive housing and high rents. It is appealing, particularly millennial and young professionals. Co-living is not a new concept, but just got a new name recently. Many people, especially students and young professionals, prefer to share a house or apartment, usually with other students or professionals. Various privately-operated hostels or lodges work on the basic concept of co-living.
The basic difference between a co-living space and private hostels or paying guests (PGs) is there services and amenities. Co-living spaces are generally professionally managed by co-living operators whereas private hostels or PGs are mostly unorganized and deprived of amenities similar to co-living space.
Co-living trends have been around for several years now, they are getting more organized now. Co-living is a shared accommodation, involves tenants sharing common areas such as the kitchen and the living room while still having some privacy—generally a personal bedroom. Most Co-living startups are targeting young professionals and university students, a rejected lot in India’s traditional rental market. The idea has been gaining traction with millennials across the globe, especially in the US and Europe. The concept is still nascent in India, though the response is phenomenal.
The biggest driving force behind the rising popularity of co-living spaces is the young renters moving to new cities for job prospects who are looking to meet and connect with new people. With no lease contracts, the residents have the flexibility to stay for as long as they need and as their work demands. The lock-in periods of co-living spaces usually vary from two to six months and the refundable security deposit. While developing a social circle in a new city can be daunting, co-living startups say they can provide a sense of community.
Types of millennials that it caters to
- Students pursuing higher education in non-native cities
- Digital nomads
- Freelancers and people working on short-term contracts
- Single women
- Young working professionals
Reasons why co-living is the future of the residential real estate for the urban millennial:
- Ease of Living
- Sense of community – Studies suggest that more than 40 per cent millennials suffer from chronic loneliness. Co-living spaces offer the perfect antidote. Living in a community of like-minded individuals – bonding over breakfast and barbeque evenings – makes it easier to have meaningful face-to-face conversations in an increasingly virtual world.
- Lifestyle choices – Youngsters prefer residential spaces that are more flexible and social. Millennials are drawn together by lifestyle choices and not so much of religious affiliations or other considerations.
Market size and opportunity
- There are around 34 million students in higher education institutions and the unmet demand for student housing remains as high as 30% -60% across the major cities.
- The student enrollment has grown by 13.3%, currently stands at 36.64 million students as of 2017–18 for all India. According to All India Survey on Higher Education 2017-18, nearly 59% of the total student population is enrolled in higher education only in five states such NCR, Maharashtra, Karnataka, Tamil Nadu, and West Bengal.
- As per the PwC report, the residential rental market in India is estimated at $20 billion, of which urban spaces account for $13.5 billion. Around 95% of an entire rental residential market is unorganized and dominated by paying guests (PGs), hostels, apartment rental by uncles & aunties, local brokers, and service apartments.
- Currently, the top 15 Co-Living service operators are offering around 84,500 beds combined.
Driving factors of Co-Living in India
- The onset of 2019 saw a big announcement, US private equity giant Warburg Pincus to from the US $430 million Co-Living joint venture with India’s Lemon Tree Hotels.
- WeLive, a subsidiary of WeWork is set to debut in India in 2019.
- OYO in Oct’2018 already ventured into co-living spaces in India named as OYO Living.
- There are many Indian startups which foray into co-living space industry. Some of the prominent Co-Living service operators like Nestaway, CoHo, Stanza Living, Zolo, Homigo, Youthville, OYO Living, Yourspace and CoLive.
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