Co-working and co-living spaces ensure these facilities to occupants. Between 2011 to 2016, interstate migration in India touched 9 million annually.
Co-working and co-living are two innovations which are redefining the way people live and work. While choosing a location for living and working, there are many factors such as proximity to work, safety, social infrastructure, cost, security deposits and rentals which play a big role.
Co-working and co-living spaces ensure these facilities to occupants. Between 2011 to 2016, interstate migration in India touched 9 million annually. To meet the housing demand of this mobile population, a cost-effective and flexible lifestyle solution was required. This proves that there is significant opportunity for co-living operators in India.
"Co-living, like car-pooling and co-working, is the result of demand for more evolved rental housing solutions from millennials, students and young working professionals whose choices differ vastly from those of previous generations. Going by recent trends co-living may offer a higher rental yield of as much as 8-11%, as compared to the current average yield of 1-3% in residential properties. It is definitely paving the way for a new asset class in real estate investing. Interestingly, co-living spaces can also bring down the average cost of living for consumers by as much as 10-15% on the back of optimal real estate utilisation and the economies of scale," says Anuj Puri, Chairman - ANAROCK Property Consultants.
Rising demand for co-working space is changing the dynamics of office space in India. According to Knight Frank data, while co-living segment is set to offer a business opportunity of INR one trillion and 5.7 mn beds by 2023; co-working spaces already have a 12% share in total office leasing. The growth of co-working spaces is likely to push property prices of projects located around them.
People are likely to live near locations with proximity to job hubs and economic activity. Commuting for long hours is something people want to avoid. Therefore, both co-living and co-working spaces are likely to push the demand in locations where these can be encouraged.
Samantak Das, Chief Economist and Head of Research & REIS, JLL India, says "With these two innovative segments (co-living and co-working), Indian office and residential real estate is set to grow bigger and better. However, stakeholders need to address the existing challenges such as data privacy, the conservative approach of property owners and relevant supply observed across co-working and co-living, respectively."
Knight Frank report reveals some key trends:
As the co-working spaces expand, new offices are going to come up giving a boost to commercial and residential projects.
Nakul Mathur, MD, Avanta India says, "Co-working segment is growing in India and is expected to witness a further growth of 40-50 per cent in the next one year. With the growth of co-working space demand for residential houses around it also increases as it gives an opportunity to live near the place you work. Most of the people using co-working space are freelancers or startups. These people try to save every penny and that also includes unnecessary travel expense to the office."
Mathur further adds, "Currently, there are a little over 200 premium business centres and 150 aggregated shared offices across the country. These figures are likely to see a marked change as premium business centres are set to double by 2020 and aggregated shared offices will reach a figure of 500 by that time. Around 42 per cent of India's population will live in urban centres by 2025. This growth of co-working centres will further fuel demand for the residential segment."
There are many challenges that these two innovations have to go through before they finally prove successful in the Indian scenario. However, trends appear to be positive for these two innovations and likely to bring down cost for consumers in future.