The increasing movement of the millennial population has given rise to the need for various types of rental accommodations in most of the Indian cities over time.
A large percentage of India’s population consists of millennials (18-35 years) who form the majority of the wage earners and consumers in the country. This population is more mobile and is constantly moving out of smaller towns to major cities for education and employment opportunities. The increasing movement of the millennial population has given rise to the need for various types of rental accommodations in most of the Indian cities over time. Out of the available options for rental spaces, the shared spaces such as paying guest (PG) accommodation, hostels, and shared apartment are preferred among the youth.
Affordability, proximity to the workplace/educational institution, surrounding amenities, and status of physical and social infrastructure are some of the few key factors that are considered by millennials while choosing their accommodation. In most cases, young people moving to larger cities for education and employment are faced with the challenges such as high rent, security deposit and deal with landlords who are still averse to rent out the apartments to bachelors. Therefore, the shared accommodation has been the alternate for people faced with such difficulties with renting an apartment of their own. The shared spaces are an economical option for young people looking for decent and safe accommodation in big cities, in the form of hostels, paying guest accommodation, mansions, and serviced apartments. Hostels, paying guest accommodation and mansions cater primarily to the requirements of students while service apartments are offered by corporates to its employees, posted out of hometown. On the other hand, traditional shared accommodation continues to cater to the housing requirement of the floating population in the cities.
With the tendency of today’s Gen Y to get smarter in every aspect of living, which is also reflected in their preference for shared accommodation. Co-living is a growing trend in the shared accommodation space owing to its popularity among the youngsters, which is becoming a necessity rather than a choice. Co-living is the formalization/institutionalization of the traditional shared accommodation models, in addition to offering tenants a home-like atmosphere. The traditional forms of shared accommodation provide rooms on single occupancy, twin, three sharing basis to residents, with access to common amenities. The co-living space aims to remove the barriers in the traditional shared accommodation such as congested rooms, lack of safety, inadequate checks, with respect to food quality, sharing of utilities, security risks, etc.
In the co-living business model, the operators lease apartments from the owners and offer furnished apartments to prospective tenants. This concept is a win-win situation for both the house owners and tenants as the owners receive assured rental, proper screening of the tenants, and the property is well-maintained. On the other hand, the tenants have access to economical accommodation, good living conditions, security, and the flexibility to move out of the house. Tenants in the co-living spaces have the choice of occupying an entire unit independently as a group of friends or can share units with allocated co-residents. The rentals for these spaces range between Rs 10,000 and Rs 25,000 per month depending upon the location and amenities provided.
In big cities such as Mumbai, Delhi, and Bengaluru, co-living spaces have come up close to major employment centres to tap the demand for accommodation. Main operators in India include COHO, Co-Live, Roomi.com, Woodstay, Stayabode, Ziffy Homes, etc. In India, co-living is at a nascent stage and mainly focused in cities such as Delhi, Mumbai, and Bengaluru while Pune, Hyderabad, and Chennai are next in line for expansion. Aspects such as changing lifestyle choices, comfort of living, safety and security, technology influence, and cost factors are some of the factors driving the co-living market in India, thus outdoing the traditional shared accommodation business models. However, factors such as maintenance, uncertain count of residents, gender-related factors, etc. will hinder the growth of the concept in the coming years.
(By Roy Thomas, General Manager, Valuation & Advisory Services, Colliers International India)