![co-living market in India co-living market in India](https://businessnewsthisweek.com/wp-content/uploads/2020/06/IMG_7060.jpg)
New Delhi: Realty WEBSERIES which is being organised by ICCPL, country’s leading PR firm in association with Realty & More, a renowned realty magazine, saw deliberations on ‘Co- Living Market post Covid 19’ in its 8th edition of the webinar. Overall the co-living market in India is pegged at USD 4-5 billion and by 2025 it is expected to grow to USD 10-12 billion by 2025. Panelists discussed rental yield, the likelihood of rental reduction, consolidation in the co-living market, real estate developers getting into co-living, etc.
Mani Rangrajan, Group COO, Housing. Com, felt, “Whole residential segment of the real estate sector is little stressed. So we expect prices to soften, then rental yields are also likely to come down. When we compare at 2-2.5% rental yield from home to 8-11 per cent of co-living then it is much higher. Some co-living companies are under stress and the cost of these companies has gone high as the same occupancy ratio cannot be maintained in the current situation when many people have gone back home added to this additional housekeeping cost. While co-living offers better rental yield as compared to traditional rental yield. The rental yield is likely to come down over the next 6-12 months and then it will stabilize.”
In the short term, given the Covid scare, there has been a shift in how the market behaves as people are leaving and social distancing, however, Ankit Gupta, Chief Operating Officer, Frontier Business, OYO, said, “We are seeing a significant turnaround. Our occupancy is going up and on a month-on-month basis, we are almost 50 per cent up as compare to last month. There are few trends like the concept of WFH is shifting to WFH and office integrated. Then many people are shifting away from unorganized PGs to a more organized segment where hygiene is maintained and all protocols are followed. Now, people are asking for single sharing.”
There is a cost attached to maintaining co-living which is likely to increase in new normal where sanitization, etc, comes into play, Uday Lakkar, Founder & CEO, CoHo.in, said, “A lot of things are already done as all these norms were all followed and so there will not be too much effect on cost. And people are ready to pay as they see the value for money”
Talking of the net absorption in next couple of years in terms of demand, Jitendra Jagadev, Founder & CEO, Hello World, and Co-founder, Nestaway Technologies, said, “Demand is coming back as people will need a place closer to their office, a place which safe for them to stay. So we have to give industry standards such as round the clock power supply, internet, etc.”
Shubha Lal, Co-Founder, Your-Space, highlighted the key growth drivers for the co-living segment and said, “We primarily focus on students who are still to come back as colleges are closed. Parents are concerned about social distancing and hygiene. We found out that with such high standards being provided by co-living parents are okay with double sharing. However, players who have triple and four sharing will likely come under pressure which is primarily in unorganized sector.”
As the sector grows consolidation will be there, Ajay Sharma, MD, Valuation Services, Colliers International India, said, “Especially if you want to move to newer markets in tier II and II cities to provide the same facilities that require a lot of capex. It makes sense to acquire a local player and transfer the know-how from the urban market to provide much better services in those areas. In Europe and other markets, a lot of private equity players encourage this part. In India, we are still way off and will take some time to happen.”
A lot of new companies are coming into the segment as the sector has low barriers for entry to set up, Rangarajan felt, “A lot of supply will come in the market as many developers are coming into co-living either themselves or partner with a co-living player. The supply will be in two forms: ready-to-move-in inventory to be provided to the co-living player to get rental yield and potentially sell it to investors who get assured returns on their property; many developers are also thinking of building for co-living players like the whole tower in as project for co-living player. Organized player share is going to get bigger and they are going to grow.”
Like real estate relying on technology to attract more customers, co-living is also using the technologies, like Gupta, said, “We are making sure a lot of property information is available on our app and we are giving virtual tours to people who are not keen to physically visit the place given the current situation.”