Living together has various connotations in India, some pleasantly unnerving and horrendous to some. Before you think we’re delving deep into the plot of a movie centering on living in before marriage, you’re wrong! Jokes apart, co-living is one of the sectors that is expected to generate business opportunities close to a whopping Rs. 1 lakh crore by the year 2023 as per several studies and reports.
The co-living segment will continue growing exponentially over the next 3-4 years with increasing demand from customers for shared rental space as per market experts. Growing shared rental demand will spur overall market growth while enabling a Rs. 1 trillion business opportunity by the year 2023 in addition to overall capacity of 5.7 million beds from Rs. 458 billion and 3.6 million beds earlier in the year 2018 as per experts.
How co-living can be a goldmine for Indian real estate
Here are some of the key aspects which you need to know relating to co-living spaces redefining the Indian real estate space.
- Growing demand from start-ups, corporates and entrepreneurs has led to demand going up for co-working spaces in the office leasing category.
- Demand in this segment has jumped up to 12% in Q1 2019 as compared to 8% last year.
- The co-working concept has accounted for absorption of 6.9 million sq. ft. between 2017 to Q1 2018.
- Millennials account for a major chunk of the workforce in the country and seek flexible workplaces with more collaboration.
- Metro cities are already witnessing the growth of co-working spaces while Tier-II cities like Ahmedabad, Indore, Kochi, Bhubaneshwar and Jaipur are also accepting this concept readily.
- Co-working is here to stay and millennials are bringing about a shift in mind set when it comes to co-living or shared living as well.
- Co-working enables savings up to a whopping 20-30% as compared to regular office space costs. There are good returns in this segment which is higher by 2-4 times as compared to conventional residential returns hovering between 2-3% on an average.
- The co-living segment is also growing as a result of demand for co-working and should drive realty growth over the next few years.
Why Indian real estate will benefit
Millennial customers are taking like fishes to water to the concept of co-living or shared living since it denotes joint ownership. In fact, real estate developers in the Indian residential property market, are seriously considering this segment since there are rising opportunities now, particularly in metro cities and leading Tier-II cities which have huge populations of millennial professionals who have migrated for employment or educational pursuits.
With co-working and co-living becoming two dominant market categories, the Indian residential realty and office categories are expected to witness steady growth in the future. Stakeholders, however, have to tackle some of the hurdles inherent in these concepts such as privacy of data/information and the overall conservative mind sets in several places for owners of property. There is also a shortage of supply levels in comparison to traditional categories. More supply is desired from the part of developers in order to cater to growing demand from customers in these segments.
Developers are expected to come up with more offerings in the shared living segment including properties which have leases for shared accommodation and even rentals for shared furniture, gadgets and other items. While co-living is already an established concept in the West, it is still in a nascent stage in the Indian market. However, in a market impacted badly by demonetization, RERA and GST and limping back to recovery, Indian real estate will naturally look to cash in on this growing business opportunity. A flurry of announcements regarding co-living projects/specifically tailored accommodation are expected sometime in the near future as per experts as more big realty players will be looking for opportunities in this category.