The co-living segment has recovered from the onslaught of the COVID-19 pandemic and demand for rental homes has risen sharply with reopening of offices and colleges, according to top industry players.
The co-living industry, which provides managed rental accommodations for working professionals and students, was severely affected during the last two financial years due to the pandemic and lockdowns that caused reverse migration from cities.
It was among the worst affected sectors because of closure of offices, schools and colleges for a long period of time. Many small operators even shut their businesses.
Top officials of leading co-living operators such as Stanza Living, CoLive, Housr and Settl said the demand for beds in their co-living centres has bounced back to pre-COVID levels or even higher, encouraging them to expand their operations.
Rentals per bed too have improved after a fall during the pandemic period, they added.
Property consultants Housing.com and Colliers India expect significant increase in demand-supply as well as investments in this segment in the coming years.
Interestingly, the demand for single-occupancy rooms has surged as working professionals need hygiene, privacy and adequate space to work from home.
On the current market scenario, Stanza Living co-founder and MD Anindya Dutta said, “The pandemic had indeed impacted demand but with economic activity opening up, the larger sector and our business in particular, has seen very strong and sharp recovery. We have already surpassed our pre-COVID demand peaks by over 3.5 times.” Housr co-founder and CEO Deepak Anand said the company has witnessed resurgence in the demand for beds after offices started reopening and it is already operating at pre-COVID levels.
Abhishek Tripathi, co-founder of Settl, said the company is operating at pre-pandemic level and is looking to expand business.
Suresh Rangarajan, founder and CEO of CoLive that has 30,000 beds in Bengaluru, Chennai, Hyderabad and Pune, said the demand has crossed pre-COVID levels and will rise further as many offices, especially in the IT sector, are yet to open.
Upbeat over the demand scenario in short to medium term, co-living operators are expanding their portfolio and entering into tier II cities. Some of them are also venturing into the business of managing hostels at campuses of schools and colleges.
For example, Gurugram-based Stanza Living, which currently has more than 75,000 beds across 23 cities, has forayed into campus facility management and is receiving lot of requests from educational institutes for partnership.
“Our agility in adapting to external challenges while continuing to create better value for our consumers has helped us emerge as one of the strongest operators in the country with a 60 per cent market share in the managed accommodation space,” Dutta told PTI.
He added that over the past few years, professionally-operated managed accommodation solutions have attracted deep consumer interest — disrupting the traditional rental accommodation industry.
“Against the backdrop of the pandemic, there has been an even stronger consumer sentiment towards high-quality, secure and hygienic living options like ours,” he added.
On the new trend post COVID, Anand of Housr said there has been a major shift in demand towards single occupancy rooms from double occupancy.
Earlier, 60 per cent demand used to come for double occupancy, but now it is the other way around, he noted.
“There has been a significant change in the lifestyle. People are willing to pay higher rental rates for private and hygienic rooms,” Anand said.
Echoing the views, Rangarajan of CoLive said the demand for single occupancy rooms has gone up, leading to a supply crunch.
“Because of hybrid work model, people want full room to do office work. They need privacy. Hygiene factor is also there,” he said, adding that the company offers beds at Rs 8,000 for double occupancy and Rs 16,000 for single occupancy.
On future expansion, Anand of Housr said the company during the pandemic signed long-term lease agreements to add several properties at 60 per cent of their pre-COVID rates.
Housr currently has over 4,000 beds occupied and aims to reach 12,000 beds pan-India by March 2023.
At Housr, which currently operates only in tier 1 cities, the average price per bed in a twin-sharing room stands at Rs 17,000-19,000. The average price per bed for a solo-occupancy room is between Rs 35,000 to Rs 40,000, depending on the location.
“There is massive growth potential for the co-living segment in our country. By 2024, the market size is expected to double,” Anand said.
Abhishek Tripathi of Settl said the company has benefitted due to availability of quality supply at a great price.
“Demand wise also we see a shift in customer mindset, where they are willing to pay more for quality accommodation coupled with community experiences,” he added.
Ankita Sood, Head of Research, Housing.com, said the co-living segment in India has broken conventional renting boundaries and gained momentum as a quality alternative to dormitories and hostels.
The segment did suffer a blow due to the reverse migration, induced by the COVID-19 pandemic, which now is ebbing with businesses and educational institutions getting back to work, she added.
“We now see things looking up for the segment with expansion plans and substantial USD 104 million private equity investment coming in for co-living companies in 2021,” Sood said.
Major players in the co-living space are expanding their footprint across key cities and augmenting their facilities to raise the bar for shared living with quality services, safety and security, she added.
In December, Colliers India came out with a report saying that the number of beds fell to 1.3-1.4 lakh in 2020 from 2 lakh in the previous year, while the occupancy level dropped to 40-60 per cent.
During the 2021 calendar year, the supply again bounced back to over 2.10 lakh beds, and the occupancy level improved to 70 per cent. The number of beds could surge to 4.5 lakh by 2024, the consultant added.
Besides these four operators, Zolostays, Your-Space, Coho, NestAway and Embassy group are other major players in the co-living segment.