India’s Co-living Bonanza
India is a young and populous country and as millennials flock to the big cities, co-living is filling a massive niche. Namely, affordable housing for the millions upon millions of millennials flooding into dense urban areas in search of economic opportunity.
New research by real estate consultancy Knight Frank estimates that co-living (communal living) developments occupied 3.6 million beds, or 2.6 percent of India’s entire 2018 residential rental market. In four years, this will balloon to 5.7 million beds - over 8.3 percent of the market.
India’s mega cities are incredibly dense and long commute times for young professionals can be arduous and a drag on productivity. One of the main appeals to co-living is prime location near jobs and schools at more affordable rents.
A survey conducted in the research showed that over 50 percent of India’s millennials would be open to living in a co-living arrangement. The concept is still fairly new with consumers; the report states that as co-living goes mainstream, more will be drawn to the model.
“As our cities continue to grow, we’re now seeing increasing urban migration, so much so that, over 70% of our population is expected to live in cities by 2030” - a quote from Viral Chhajer Co-Founder and Chief Executive Officer, StayAbode Ventures one of the leading co-live brands operating in India.
The three Cs
The rise of co-living is based on the three Cs principle: Convenience; Community; and Collaboration.
Convenience in terms of location next to educational and employment hubs, but also in terms of ease of move-in with no middlemen and difficult landlords.
Community in terms of alleviating loneliness factor and organized social events;
Collaboration in terms of professional networking and creative inspiration.
Mobility across branded co-live network communities with access to resources and facilities fits with the modern mobile way of life.
Co-Living in India, Supply Side
India’s real estate industry is exuberant over co-living as an asset class. The Indian home renting market is estimated at US$32 billion. Co-living presents an opportunity for investors to diversify risk.
The co-living model allows more people to be accommodated since common spaces are shared. This generates more density and more rental income.
Developers are excited because co-live housing design is more flexible compared to traditional multi-family builds. Ground-up co-live developments can at any point be converted to serviced apartments or student housing, if a particular site goes under-utilized from its intended brand or use case.
Traditional single-occupancy units are harder to convert since more space is dedicated to low utilization areas such as kitchens and drawing rooms, the cost of which (in terms of space utilization) is upheld by the tenant.