At present, almost 40% of India’s millennial workforce comprises migrants, looking for affordable yet modern living spaces.
Real estate players and investors are increasingly eying co-living to boost revenues with the segment, which is largely unorganised (paying-guest accommodation), fast emerging as a new asset class. The change is driven by a highly mobile millennial workforce and a growing student population with a new mindset, says a report by Housing.com.
The online real estate listing portal said the segment is estimated to have generated a revenue of Rs 1.39 lakh crore in 2019, of which a mere Rs 2,880 crore, or a little over 2%, was the share of organised players. However, by 2023, this share will grow to 15-18%. It projects that by 2023, total revenue from co-living will be around Rs 2 lakh crore, of which organised players will account for Rs 30,000-36,000 crore.
Currently, the total listing by organised players is around 2 lakh beds. A bed generally generates a revenue of Rs 12,000 per month, which translates into the organised sector generating a revenue of $407 million (around Rs 2,880 crore) in 2019. The sector has witnessed an investment of $350-400 million, so far.
The rental yields of co-living spaces can go as high as 8-10% against 1-3% by residential properties.
“Co-living is transforming traditional renting and is being driven by a highly mobile millennial workforce and a growing student population. India’s young population wants flexibility in housing options that allows them to move quickly in a highly dynamic work environment. Co-living provides ultra-modern living spaces with a plethora of amenities and a like-minded community, all at pocket-friendly rates,” Dhruv Agarwala, group CEO, Elara Technologies, which controls PropTiger.com, Housing.com & Makaan.com, told FE.
At present, almost 40% of India’s millennial workforce comprises migrants, looking for affordable yet modern living spaces. Anticipating this number to hit 75% of the total workforce by 2025, many organised players are jumping into this space. Similarly, of the 37.4 million students pursuing higher education courses in 2018-19, around 15 million were migrants.
“Even as student enrollment in universities rose from 34.6 million in 2015-16 to 37.4 million in 2018-19, only one in 6 students is able to find hostel accommodation. This demand-supply mismatch is largely being met by unorganised sector at present. Since the government is targeting a gross enrollment ratio of 32% by 2022 from 26.3% last year, there is likely to be substantial increase in number of migrant students, which will lead to a further increase in demand for hostels. There is a huge opportunity for organised players,” Agarwala said.
Eying the interest generated by co-living, Housing.com has launched an exclusive co-living section on its platform, with half-a-million beds listed across 12 major markets, which it plans to scale up to a million beds by 2020 end. The portal has tied up with Oyo Life and Zolo to promote their co-living spaces on its platform.
The 12 cities contributing to the listings include Mumbai, Delhi, Gurugram, Bengaluru, Kolkata, Pune, Noida, Chennai, Ghaziabad, Hyderabad, Chandigarh and Ahmedabad.
OYOLife, Zolo Stays, NestAway, CoLive, Guesture, Stanza Living, etc., are some of the major players in this segment. Other players such as Placio, Isthara, ZiffyHomes, OxfordCaps, etc., have entered this sector in the last 2-3 years and are showing remarkable progress with the help of VC funds to grow business.