A lot of change in the current world is attributed to millennials, and coliving is one such aspect. Millennials in India, account for around 47% of today’s working population and are actively embracing the caprice of shared economy. Coliving offers a better alternative to paying guest accommodations that have been rampant in Indian cities for decades. Such accommodation for working professionals and youngsters/students have typically been cramped spaces, lacking facilities and privacy. Finding suitable accommodation has been a challenge for young working professionals in India not only due to high rentals, high but also exorbitant security deposits, and poor amenities. Moreover, the market in India is fragmented and most of them are rarely professionally-run. Therefore, a slew of new operators stepped in over the last 2-3 years, to further polish the age-old concept of shared accommodation, to community-based living or coliving. Companies such as Oyo Rooms, Zolo, Nestaway, ZiffyHomes have descended upon this market, led by the sheer potential of this space in India. In fact, even developers such as Puravankara and Embassy are entering into the coliving space.
Coliving operators are offering housing units equipped with facilities such as housekeeping, laundry services, security and meals, and even additional amenities such as gaming consoles, libraries, gyms, high-speed Wi-Fi. Operators have established their market presence in cities like Bengaluru, Chennai, Hyderabad, Pune and Delhi NCR. Bengaluru is particularly witnessing the boom in this trend with all major co-living start-ups having established eminent footprint in the city. Cities with major student population also showcase a high demand for this type of housing. The current trends indicate that this new form of accommodation is increasingly driven by the young and unmarried millennials, aged between 20-35 years. This has manifested in a stark change in the usage pattern of rental accommodations in major metros. The majority of the coliving operators have become active since 2017, with many of them claiming occupancy rates even higher than 90% in metros like Delhi/Gurgaon, Mumbai, and Bengaluru.
Operators are expanding at a rapid pace, with investors’ confidence a main catalyst for the growth of this niche segment. In a recent report by Colliers International “Investors in India Look To Office, Data Centers”, institutional investors in India showed a preference for student housing and coliving. Plug-and-play model and the entrepreneurial skills showcased by the emerging start-ups in the segment has garnered high demand from multinational investment companies such as Goldman Sachs and Warburg Pincus in this space.
Coliving start-ups/operators are also aiming to modify existing typical mundane, unfinished houses and even unsold inventory to swanky-user friendly apartments that are tech-friendly, to suit the tastes of the millennials. This provides an opportunity for homeowners and real-estate developers sitting on an ideal inventory to monetize on the situation. Promising rental yields as high as 4% to 6%, as against yields of 1% to 2.5% in traditional residential assets should draw in more investors.
Change is the only constant for the millennials of today and we expect this trend of coliving is here to stay especially in niche segments like student housing and senior living. This segment is expected to undergo continuous metamorphosis, based on the altering needs of the millennials.