Co-living spaces are likely to become a significant segment in the rental market, with 56 per cent of millennials willing to consider co-living spaces in India’s top cities, finds a survey by Knight Frank India.
Seventy-two per cent of millennials (belonging to the age group of 18-23 years) have given co-living spaces a thumbs-up and over 55 per cent of the respondents in the age group of 18-35 years are willing to rent co-living spaces, according to a report by international property consultancy Knight Frank India, titled ‘Co-Living – rent a lifestyle’.
The survey was undertaken across the top cities of India, including Mumbai, Bengaluru, Pune, Hyderabad and NCR and received responses from a cross-section of people, between the ages of 18-40 years.
The survey also found that close to 40 per cent of all respondents, were most comfortable with paying between Rs 1,20,000 and 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 10,000-15,000.
|18-23 years||24-29 years||30-35 years|
|Percentage of respondents willing to spend Rs 10,000-15,000 per month||54 per cent willing to spend Rs 10,000-15,000 per month on their accommodation.||46 per cent willing to spend Rs 10,000-15,000 per month on their accommodation.||39 per cent willing to spend Rs 10,000-15,000 per month on their accommodation|
|Most common annual
|53 per cent of the respondents in this age group earn an annual income of less than Rs three lakhs.||45 per cent of the respondents in this age group earn an annual income of more than Rs eight lakhs.||56 per cent of the respondents earn an annual income of more than Rs eight lakhs.|
|Percentage of respondents willing to consider co-living spaces||72 per cent of the respondents in this age group are willing to consider co-living spaces as an option for their accommodation.||56 per cent of the respondents are willing to consider co-living spaces as an option for their accommodation.||29 per cent of the respondents are willing to consider co-living spaces as an option for their accommodation.|
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Commenting on the findings, Shishir Baijal, chairman and managing director, Knight Frank India said, “Co-living aims to create a community-centred 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. Although the concept is novel, it is 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 in rental housing, will be able to bridge the housing gap.”
Key highlights of the report
- A stable co-living asset potentially delivers up to 12 per cent rental yield.
- The sweet spot for rental homes is at Rs 1.2-1.8 lakhs a year.
- 37 per cent of private working professionals and 45 per cent of student respondents surveyed, were willing to spend between Rs 10,000 and Rs 15,000 on monthly rentals.
- Of the total millennials surveyed, 56 per cent were willing to consider co-living spaces for their accommodation requirements.
- In the 18-23 years age bracket, 72 per cent were willing to consider co-living spaces as an option for accommodation, while in the age bracket of 24-29 years, 56 per cent of the respondents were inclined to consider this option.
- Proximity to work and social infrastructure remained the top priorities for millennials, while selecting a location, while only five per cent gave importance to rental costs.
Co-living inventory presents a lucrative rental income opportunity for developers/ owner operators. The study says that a stable co-living facility, generates a net yield of approximately 12 per cent, while rental yields from a traditional 1-BHK remain at 1.5 to three per cent. Co-living further enhances revenue potential, as cost of shared spaces such as kitchen and living rooms is amortized over a greater number of bedrooms, than in a traditional residential development.
“The survey conducted by Knight Frank India shows great potential for rental housing in the country. As more and more organized 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 spaces and retail malls,”