Just next to a co-living project in Koramangala, a board hanging from the main gate of a building reads "1 BHK available."
Supriya Mehta, an advocate and also a tenant in the co-living apartment, said the board has been there since she occupied the co-living last year.
"I do not know where I will be working permanently, so I decided to take a double sharing room in the co-living for the flexibility it provides. And also, the low deposit," she said.
Local brokers in Bengaluru say the co-living sector in Bengaluru is seeing a 30-40 percent growth year-on-year since the pandemic.
A single shared room in a co-living in Bengaluru can cost at least Rs 25,000 per month in rent and go up to Rs 40,000.
Abhishek Tripathi, the co-founder of Settl, a co-living operator, said the rentals in co-living have spiked by 30 percent since last year and are likely to increase by 10 percent over the next six months.
However, despite the soaring rents, several millennials in Bengaluru prefer staying in co-living accommodations.
Experts say with the global economic slowdown and GST being levied on shared accommodation the co-living sector will take a hit if the slowdown prolongs.
Understanding who stays
Varun Pahariya, director of alternative business at JLL, says that till the end of last year, co-living held less than a 10 percent share of the rental real estate sector in Bengaluru.
However, with hybrid working picking up pace and more offices opening up, he said, "Late millennials have started occupying co-living in Bengaluru today. Most of them want to stay within a 5 km radius of their offices. Flexibility and low deposits are the most attractive features."
For example, Surosree Mondal, who stays at a co-living in Ejipura and is currently between jobs, pays a rent of Rs 10,000 per month for a double sharing room with a deposit of Rs 15,000. A single 1 BHK apartment in her area starts at Rs 20,000 with a deposit of at least 10 months rent, or Rs 2 lakh.
"I don't know if I will get a better job in another city. Co-living allows me enough flexibility and less hassle for me rather than maintaining my own apartment," she added.
Ahona Ghosh, a journalist, who recently moved to a co-living from a 1 BHK apartment, concurred.
Ghosh used to pay Rs 6,000 for a 1 BHK in Ejipura (with another roommate), but now she pays about Rs 9,000 for a double-sharing co-living room.
"Living in an apartment comes with a lot of responsibilities. I find co-living a better option with all the services like furnishing, cleaning, and the community," she added.
Kahraman Yigit, co-founder and chief executive officer (CEO) of Olive by Embassy Group, another co-living operator backed by real estate developer Embassy Group, said today most Gen-Z choose co-living next to their academic institutions in the city suburbs; while the millennials decide to stay close to the city centre.
"App-based features have boosted the sense of community with more and more co-living coming up with common amenities like clubhouses and indoor games," he said.
Yigit added that for Olive by Embassy, the sharing occupancy starts from Rs 15,000-20,000 while single occupancy starts at Rs 20,000-40,000 depending on the location of the project.
Most of the co-living accommodation, according to Subhankar Mitra, Managing Director of Advisory Services at Colliers India, is coming up in areas like Indiranagar, HSR Layout, Koramangala or the tech and start-up hubs in Bengaluru.
Currently, Olive by Embassy has eight projects under construction or redevelopment and plans to add 1,200 beds more by the end of this financial year.
Settl, which operates close to 2,000 beds, plans to double the number next year.
Both companies are eyeing prime locations close to startup hubs or IT corridors in Bengaluru.
With a lack of land parcels in city centres, co-living operators have started redeveloping existing buildings. For example, Olive by Embassy said it has redeveloped several hotels in Bengaluru like in Indiranagar and Magadi Road.
GST and global slowdown
The central government is planning to impose 12 percent GST on Paying Guest Accommodations (PGs) and student housing for rates less than Rs 1,000 per night. For others, the tax will be 18 percent.
Pahariya said both would have a significant effect on co-living and student housing and will increase the prices across the board. "Today, we see unorganised PGs in Bengaluru at every corner of the prime areas with rentals 15-20 percent cheaper than the co-living operators. However, with GST imposed we will see co-living coming down to the same scale, almost equalling both the markets," he added.
Experts say in Bengaluru co-living is largely dependent on the tech and startup sectors. "With the current layoffs and now the global slowdown caused by the fall of Silicon Valley Bank, we may see a further impact on the job market. This will impact the occupancy in the co-living sector," Mitra added.
The way forward
A typical co-living in Bengaluru starts with a carpet area of 175-200 square feet. Mitra said that on average the rental yield is 7-8 percent compared to 3-4 percent at standalone apartments. The only capital expenditure required is for the servicing of the apartments, which is normally outsourced to several vendors," he added.
Pahariya said he has started to see several changes in the largely unorganised co-living sector. "Most of the operators in Bengaluru are already planning for purposeful structures that will likely boost the demand," he added.
He said more than 90 percent of co-living apartments in Bengaluru have less than 100 rooms. "A purposeful co-living structure will have more than 700 rooms spread over a larger land parcel with all amenities present, like in a gated apartment. We will see such projects coming up close to Whitefield or Sarjapura towards the tech corridor," he added.
Tripathi added that the B or C Grade developers in Bengaluru are gradually shifting to co-living by renting out their standalone apartments to co-living operators.