In 1933, Wells Coates, an avant-garde designer, created Isokon in London. Seeking to build a community of forward-thinking intellectuals, Isokon had 36 apartments with shared facilities like cleaning, meal-delivery, laundry and an in-house restaurant.
His description of the concept, “we cannot burden ourselves with permanent tangible possessions as well as with our new possessions of freedom, travel and experience”, was ahead of its time and attracted a narrow slice of society who bought into his vision and the ethos of modernism sweeping Europe.
More than 80 years later, this philosophy of housing checks all the boxes for the majority of our young working population, and this explains the growing interest in the brand-new real estate asset class: co-living.
What is co-living?
Co-living spaces are community-based housing facilities that combine features of hotels with those of private homes. They offer a wide range of services that take care of tenant requirements like utilities, housekeeping and connectivity, and they offer well-designed shared spaces such as lounges, business centres, game rooms and gyms.
Underpinning this trend is a human universal that cuts across generations: we would all love to minimise the time we spend on mundane everyday tasks and maximise the time we spend doing things that we find fulfilling, exciting or just fun.
The washing machine, dishwasher and microwave oven started a revolution of people taking control of their disposable time, and now the sweeping technological and social change of the Internet and the sharing economy have accelerated our ability to focus on our interests.
We are still discovering the potential of the Internet to transform parts of our lives that we take for granted. Swiggy, Zomato, and UberEats have changed the way we eat. Uber and Ola have changed the way we commute. Airbnb has changed the way we travel.
Now the two places where we spend the most time— our homes and our places of work—are also being redefined. Co-working has taken commercial real estate by storm, giving businesses an unprecedented flexibility, efficiency, and convenience. Next in line: our homes.
Benefits of co-living
In addition to the convenience and time-saving, co-living also solves a geographic problem faced by modern workers. Gone are the days of start-to-retirement careers in a single company—the average tenure at a company is on the decline as we become less afraid to experiment and gather new professional experiences.
Our appetite to move now includes new cities or even countries. For the highly mobile segment of our population, typically highly educated singles and couples without kids, co-living can be very attractive and fit perfectly with their desire for flexibility and convenience.
Co-living also provides a social outlet for busy professionals. Isokon had an express purpose to facilitate relationships beyond the nuclear family, and the idea has now caught on as families get smaller and young professionals marry late.
Most co-living operators organise periodic group events like yoga, dinners, and other shared activities, and these well-designed facilities have a community-centred design with attractive lounges, movie rooms, and games rooms.
Co-living has become especially popular in the most expensive cities of the world. In such places, it no longer makes sense for upwardly mobile young professionals to waste their savings in seldom used private spaces within their apartment. Instead, it makes more sense to have private spaces only for those activities that require privacy—the bedroom, the bathroom, and perhaps a small kitchen, and use common lounges and recreational areas to entertain guests.
While a resident of suburban America might find co-living spaces quite small compared to what they are used to, these well-managed spaces are perfect for professionals in fast-growing regions such as London, New York, or Asia.
Co-living sector worth $93 billion in India
The investment world has been surprised at the billions of dollars that have poured into co-working in the past few years. Co-living has the potential to make these numbers look small. After all, the typical worker uses less than 100 square feet at work, while the typical home is ten times that size.
And unlike co-working that involves the redesign only of office interiors, co-living, in order to work efficiently, requires a rethink and construction of new homes from the ground up. It is no surprise then that the co-living sector is valued at $93 billion in India, with a large number of players like CoLive, CoHo, and ZoloStays entering the market.
The co-living sector in India grew 100 percent in 2018, with a sustained growth forecast highlighting in particular the demand-supply gap of 46.3 million beds.
Co-living here to stay as millennial population grows
More than half of India’s population is under 30. By 2020, the median age in India will be just 29 years, compared to other Southeast Asian economic powerhouses like China (37) and Japan (48).
More than any other country, the winning models across businesses in India will be designed for, and by, this dominant young segment, and that holds especially true for real-estate assets.
There are compelling reasons to believe that co-living is a long-term transformative trend in the way we look at housing, home-ownership, and the residential real-estate market. A variety of players, ranging from PE funds, developers to hospitality operators, have begun to create the financial models needed to capitalise on this opportunity.
From the modest and quirky Isokon building in 1933 to the 800-bedroom Starcity in San Jose in 2019, co-living has come a long way as a concept, a social trend, and now an investment, and the future looks bright.
(The author is a founder & CEO of SmartOwner Services India, Pvt Ltd)