What is Co-Living?
Co-living is a new lifestyle trend that focuses on private living within a larger community space. So occupants pay rent for a private bedroom with an attached bathroom but share common spaces such as kitchens, living & dining rooms, lounges etc. This largely urban trend is prevalent in large cities across the world and is rapidly spreading in Indian Metros like Bombay & NCR, and tier cities like Pune, Bangalore, and Hyderabad. Although this trend has been around for a long time, it is only recently that real estate developers are recognising the opportunities for growth in this sector.
The recently conducted Knight Frank survey found that a whopping 72% of millennials (18 – 23 years) have given co-living spaces a thumbs-up and over 55% respondents in the age group of 18 – 35 years are willing to rent co-living spaces.
Who is Living the Co-living Lifestyle?
Predictably, millennials are providing the biggest impetus to the co-living lifestyle. Currently, Indian millennials account for about 34% the population, with the figure expected to touch 42% by 2025. These figures underline the enormous growth potential in the organised co-living and rental housing market.
This group of young upwardly-mobile renters migrating to cities in search of jobs are looking for easy access and reasonably-priced rental accommodation. In a recent survey conducted by Knight Frank, 56% of Indian millennials surveyed were willing to consider co-living spaces as an accommodation choice.
Another group that is quickly influencing the market is students. 45% of students surveyed, were willing to spend between Rs 10,000 and Rs 15,000 on monthly rentals.
However, not all residents who opt for tis lifestyle are millennials. Self-employed entrepreneurs who travel extensively for work are also choosing co-living spaces for the flexibility it offers without having to pay astronomical rents.
Benefits of the Co-living Lifestyle
- A great way to live in a community while still having a private space of your own.
- At an average cost of Rs.10,000 – 15,000/month, the cost is much cheaper than the rent for even a small 1 BHK in a Metro.
- Cheaper rents mean tenants need not compromise on location. They can instead pick a home close to their workplace, within their budget and cut down on travel time at the same time, improving their work-life balance.
- Rent usually includes of amenities like Internet connections and gym membership, utilities, taxes, and room cleaning services.
- This is a great way to meet new people and make friends in a large city where the fast-paced life can initially be quite intimidating for newcomers from small towns.
- Offers flexibility in terms of changing locations in cities where companies maintain their co-living properties.
- Rental yields from stable co-living assets can potentially be as high as 2% when compared to the 1.5% – 3% yields from a traditional 1 BHK.
This currently nascent market has great growth potential as evidenced in the Knight Frank survey. As this market develops, and companies get seriously invested, they will attract higher institutional funding which in turn will return better yields on investment. With urban migration only expected to accelerate in the future, co-living spaces will help alleviate the current shortfall in affordable rental housing.