With an increase in the number of millennials, the co-living market in India is expected to grow more than double by 2025 in the top 30 cities that are the major economic centres of the country.
The current market size for co-living spaces is $6.67 billion, which will grow to $13.92 billion across top 30 cities, said a report.
The demand for co-living spaces in terms of the number of beds is slated to grow from to 5.7 million, up from 4.19 million. The share of private beds shall rise from 15 percent to 30 percent of the total demand in the co-living segment, says a report by Cushman and Wakefield India titled Co-living – Redefining urban rental living.
The report noted that co-living market in India is evolving at a rapid pace with investments from national and international institutional investors bringing in much-needed seed capital, thereby allowing a new business model to thrive and aim for achieving scale.
Co-living operators are tying up with developers for built-to-suit property options, an upcoming trend that is likely to prevail in the sector. Operators opting for ready-to-move-in properties that are refurbished and renovated as per their requirements, are showing preference for properties having at least 50-60 rooms, the report said.
"Co-living is an evolving sector and is expected to grow more than 2X by 2025 in the top 30 cities which are the major economic centres in the country. Within India, the co-living model is currently catering to mostly millennials comprising single, young working professionals and student population," read the report.
"Furthermore, as the business evolves, co-living shall transform the face of the rental housing market in urban centres, similar to what we are witnessing with flex-working in the office rental space," said Anshul Jain, Country Head and Managing Director -India, Cushman and Wakefield.
The report provides an insight into India’s urban housing pyramid, which is skewed one with the biggest proportion of the population base being the most under-served.
Limited accommodation capacity within academic institutions for students in higher education is also likely to act as a demand driver for rent accommodation for the millennial segment.
Millennials moving into new cities for work or education are forced to deal with negative perceptions harboured by landlords and home owners' on single people and students.
This, coupled with the limited availability of quality accommodation that meets the basic requirements, makes the stay in these unorganised set-ups, (PGs/ dorms/hostels) a not so favourable option for millennials, who, having higher disposable incomes, are even ready to spend a little more to enjoy better lifestyle standards with experience, it said.As for costs, the average spend on living and household expenses is approximately 20-30 percent of one's disposable income. Millennials may consider increasing their spending to around 40 percent for organised co-living formats, which offer an enhanced lifestyle opportunity, the report said.