Co-living presents the next multi-billion dollar opportunity for start-ups

Co-living presents the next multi-billion dollar opportunity for start-ups and entrepreneurs as it is slated to grow from a $12 billion market opportunity today to over $22 billion by 2022, as estimated by RedSeer Consulting. Nearly 80 per cent of the demand for co-living spaces is driven by the migrant millennial workforce followed by students.

To cater to this demand, 42 co-living start-ups have mushroomed around the country over the last few years which have together mopped up $151.36 million in Venture Capital funding from 2016 to date, as per data sourced from start-up research and analytics platform Tracxn.

Co-living spaces are exclusive residential spaces that foster community living and are created by external agents such as entrepreneurs or builder/developers. Fully furnished single/double/triple occupancy rooms with a slew of free amenities like Wi-fi, electricity, water, DTH, housekeeping, security, are on offer along with common areas including fully equipped kitchen and washing areas, gaming zones, lounge and movie screening areas, reading areas and food provided on a subscription basis. Rents range from Rs 7,000 per head for double sharing to Rs 20,000 for single occupancy.

Nestaway, one of the early movers when it started in January 2015 with its managed home rental network in Bengaluru, is now present in 13 cities with 30,500 plus houses across India with over 72,400 customers. The start-up has raised $94.2 million so far, as per data sourced from crunchbase.com. Earlier this month, Colive, that offers managed rental homes for young working professionals and couples raised $9.2 million, Grexter that caters to working millennials and students raised $1.5 million this January and Stanza Living, that caters to student housing, raised $10 million last September. Even OYO launched OYO Life its fully managed independent housing units last October. Zenify, Zolostays, Homigo, Cozee, SimplyMoveIn, SquarePlums, Ziffy Homes, Abode Hostels, Placio, Your Space, Azuro are some of the other co-living start-ups in the country.

“Student housing is a $15 billion market driven by over 11 million students who migrate within the country for higher education. Less than 6 million of these students are able to find quality accommodation in a largely unorganized market. Professional student housing operators like us have barely scratched the surface in catering to demand” said Anindya Dutta, co-founder, Stanza Living, which has a 15,000 bed inventory and is targeting 1 lakh beds by 2021. Students revel in the community living experience which include curated social events, exclusive brand deals and tailored learning and skilling opportunities, for their personal and professional growth, added Dutta.

Even developers are quick to jump onto the co-living bandwagon. Bijay Agarwal, MD of Salarpuria Sattva Group said “We believe co-living is going to be the next big wave in India that will alter the real estate landscape in Tier 1 cities, specially IT hubs. We will develop built-to-suit real estate which will cater exclusively to co-living requirements, which will generate stable rental income over a period of time.”

Private accommodation with common shared spaces is the new way of living for youngsters who earlier had no ready housing options as builders catered largely to family spaces. This created a housing gap for the 18-30 age group that we decided to fill, said Pratul Gupta, co-founder, Grexter. “Co-living is moving to the PropCo/OpCo model (property company/operating company) where builders will develop built-to-suit, co-living spaces and operating companies like ours will operate and manage them” observed Gupta.