Millennials give thumbs-up to co-living: Survey

Over 70 per cent of millennials, aged between 18 and 23 years, have given co-living spaces a thumbs-up as youngsters moving to new cities favour reasonably priced rental accommodation that promotes social contacts, according to a survey by Knight Frank.

Undertaken across top cities of India, including Mumbai, Bengaluru, Pune, Hyderabad and NCR, the survey found that over 55 per cent respondents in the age group of 18 and 35 years are willing to rent co-living spaces.

“Co-living aims to create a community-centered living environment that not only provides privacy in living arrangements but also promotes social contact through community spaces and programs. As an asset class, the biggest driving force behind the rising popularity of co-living spaces are young renters moving to new cities who are looking for easy access and reasonably priced rental accommodation,” Shishir Baijal, Chairman and Managing Director, Knight Frank India said in a statement.

Co-living inventory also presents a lucrative rental income opportunity for developers and owners as a stable co-living facility generates net yield of around 12 per cent while rental yields from a traditional 1BHK remain under 3 per cent. It also improves revenue potential as cost of shared spaces such as kitchen and living rooms is amortised over a greater number of bedrooms than in a traditional residential development.

“Though the concept is novel, it’s here to stay, as Indian millennials currently account for 34 per cent of the total population which is expected to increase to 42 per cent by 2025. We feel that with the recent acceleration of growth in migrant population to key cities, organised players rental housing will be able to bridge the housing gap,” Baijal added.

The survey also observes that close to 40 per cent of the respondents are most comfortable paying between Rs 1,20,000 to Rs 1,80,000 per annum towards rental housing in key cities of India. The sweet spot for rentals thus remains at a monthly outflow of Rs 10,000 to Rs 15,000.

“As more and more organised players enter co-living spaces, these are likely to attract institutional funding, assuring better yields to development and operating companies. This will therefore allow funds over time to further diversify their rental yield generating asset portfolios in India beyond office space and retail malls,” Baijal added.

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