Co-living operators are looking to expand as due to increasing demand for co-working spaces, rising housing costs, and more. Stakeholders predict that by 2024, the co-living segment will have 4,50,000 beds, driven primarily by organised players from the current 2,10,000 beds.
The shared economy, popularly known as the co-living segment in the country, has been on a recovery track, according to a report by Colliers. Operators such as Settl. have entered expansion mode and announced their plans to double their bed strength to 5000 by March FY24. Currently, the company operates 2,500 beds across Bangalore, Hyderabad, and Gurugram.
“The co-working ecosystem has a positive impact on the demand for co-living spaces. This is also because a majority of demand for co-living spaces comes around major IT parks and startup hubs,” said Abhishek Tripathi, co-founder, Settl.
The country is experiencing a rapid influx of young professionals and students migrating to different cities, especially metros, for work and education, leading to increasing demand for quality accommodations. “This trend has created an opportunity for companies like ours to cater to the needs of this growing market,” said Tripathi.
According to another operator, Zolo Stays, the demand for co-living spaces is strongly influenced by the demand for commercial offices. “If a majority of the offices are coworking spaces, then the growth in coworking would likely drive an increase in demand for co-living options, noted Nikhil Sikri, CEO, and co-founder, Zolo Stays.
“Typically, individuals prefer co-living accommodations within a 15–20 minute commute to their workplace, and as the number of offices in an area increases, so does the demand for co-living spaces.”
The company operates across ten cities and manages around 50K beds, and this year it plans to double its capacity to 100K beds. “We are focusing more on premium co-living spaces going forward because of the high demand for quality living since Covid ended,” Sikri told businessline.
The shift in perception amongst millennials to sharing instead of owning has made the co-living concept popular. Co-working offers cost savings of 20-25 per cent compared to traditional office space leasing, the report noted. Moreover, co-living offers attractive returns—2-4 times higher than the traditional residential yield of 2-3 per cent—leading to higher investors’ interest in actively pursuing options in the market to create flexible co-living facilities.
Co-living has strong long-term potential in metro cities. However, the current market scenario has presented an opportunity to consolidate and reconfigure the market,” said Subhankar Mitra, Managing Director, Advisory Services, Colliers India. The operators continually revise their metrics as the segment is still in its infancy.