Its 2019, and this is the shared economy! Millennials today understand that you don’t have to own something to experience it and use it. In the era of shared rides, shared holiday resorts, shared working spaces and shared car ownership, millennials are now opting for shared living spaces where they get all the benefits of being in comfortable living spaces without any of its drawbacks. No hefty deposit payments, no capital expenditure on furnishings and most importantly, no long term legal commitments.
Co-living is not an entirely new concept because people do team up to rent a house together. That is an informal arrangement and mostly restricted to people who have just moved to a new city, are starting out in their careers and serves as a precursor to eventually renting or owning one’s own house. What is changing now is that shared rental space is becoming organised and individuals as well as rental housing companies are seeing opportunities in this growing segment. While the industry is still nascent, it’s growing rapidly with plenty of scope in the near future as cities become more crowded and people look for cheaper options to living in our cities without compromising on a high quality lifestyle.
With rentals going through the roof, co-living is seen as a more sensible and economical option. Millennials also do not stay in one job or city for a long time making them a part of the growing migrant population that is constantly seeking new pastures.
JLL-FICCI in a recent study stated that the co-living segment will offer a business opportunity of 1 trillion rupees and 5.7 million beds by 2023 from 458 billion rupees and 3.6 million beds in 2018. That is how the growth will be. Affordability, convenience, flexibility and community are some of the pull factors that is driving the growth.
What is co-living all about? From the point of view of the co-living brand or individual it is about providing accommodation that is furnished, ready-to-live in for groups of people who cohabit either in rooms of their own or sharing rooms. It is to rental housing what Airbnb is to holiday lodging.
Who opts for co-living? At present it is mostly those in the age group of 20-30 who are opting for it and this includes students, young professionals and in some cases couples who are in live-in relationships. Unlike their parents, millennials today are not interested in owning things. They do not want to be tied down, whether it is gadgets, cars or houses.
They are also practical because they understand that co-living is helping them drastically reduce costs of living while allowing them to live in a hassle-free environment. Millennials understand that co-living also provides them with companionship, especially when one is in a new city and everything seems strange. For single and young professionals already in a career, co-living accommodation allows them to focus on their jobs and not have to bother about living arrangements.
From the point of view of the companies that are offering co-living arrangement, this has a better yield compared to conventional renting arrangements. According to the JLL-FICCI study, “Co-living offers attractive returns, 2 to 4 times higher than traditional residential yield of 2-3%.”
StayAbode, for instance, that provides co-living spaces, designs its accommodation so that occupants do not have to think about the hassles of managing a home. At their properties, utility bills are paid, linen washed and one cooks only when one feels like along with daily housekeeping. It’s like living in a boutique hotel with a community of like-minded individuals.
The company currently has 1200 operational beds across 23 properties in Bangalore and 1000 beds under contract which will be available over the next few months. StayAbode uses real-estate efficiently giving property owners upto 3 times higher yield on their properties.
Tha author is Co-founder & CEO, StayAbode