Co-living, while a relatively new concept in India, has rapidly grown to be the preferred mode of housing for millennials. This segment of the population aged between 18-35 years, who are considered to be ‘urban migrants’, are those whose career or lifestyle choices require them to be on the move, unwilling to put down roots in a particular city. Such requirements essentially mean that rental housing is the preliminary mode of residence for these individuals.
While, traditionally, such needs have been met by cheap informal rental accommodation in the form of dorms, paying-guest (PG) arrangements and hostels, the informal nature of the set-up tends to heavily favour landlords. Being informal, these set-ups are not governed by local or state-level regulations; and tenants, usually, end up facing difficulties. This has given an opportunity for operators of co-living spaces to step in and flourish in a nascent market.
Co-living in India, has been popularised by the rise of housing start-ups offering affordable housing in homes or apartments, where common facilities are shared between room-mates. Although the concept of community living or living in a community has been around for generations, housing start-ups have managed to adapt the concept with innovative technology, catering directly to the specific needs of the younger generation.
Such co-living spaces can take many forms, encompassing everything—from single family homes renovated to accommodate tenants, or apartments in a high-rise building that have been converted into dormitory-style lodging. Residing in such homes allows one to have flexible lease terms, either short-term or long-term, with additional facilities like cleaning services, professionally furnished common areas, amenities and utilities—all being part of the package.
The primary reason we are seeing a rapid rise in the number of co-living operators and spaces in India, is the growing population of millennials and the consequent rise in demand for better, affordable rental housing options. We have the largest millennial population in absolute terms, globally. Studies (
Trend-setting millennials: Redefining the consumer story) have shown that, at 440mn (million), millennials constitute nearly 34% of the country’s population, which now has a median age of nearly 28 years. They are also the chief wage-earners in India, with a 47% share in the working age population. Being the largest demographic group in India, millennials are characterised by high levels of disposable income and, as digitally connected individuals, are driving various consumer segments towards rapid growth and development.
This younger generation is not only tech-savvy, but is willing to move to new cities for better work opportunities or for higher education. They are also not at a stage of their life where taking a home loan makes financial sense. Add to this, the fact that, in the past couple of decades, there has been a drastic shift from the desire for ownership to the need for accessibility in India. The root of this change is the economic growth that started in the 1990s, which saw incomes shooting up and led to a big boom in home-ownership, including owning multiple houses.
Consequently, a significant segment of millennials and the generation before them is under no pressure to own a home and expect to inherit one from their parents.
The concept of shared rental accommodation is definitely not new. In India, migrant workforce and students have been using such shared living options in the form of PG set-ups, dorms or hostels, for many generations. But as we know, such informal rental facilities are often plagued by problems and are poorly managed, lacking even basic amenities to support a comfortable, yet affordable, lifestyle.
Being informal, such arrangements also lack the rigidity or support of government rules or regulations and landlords usually have the upper hand by imposing inconvenient restrictions on tenants. Millennials moving into new cities for work or education are, often, left to deal with negative perceptions and bias from landlords and home-owners.
Additionally, conflicts due to violation of lease agreement, hidden charges, unreasonable costs of maintenance & repairs, and loss of security deposit are among the many risks posed by the informal rental housing market in India. Such problems, coupled with the limited availability of quality accommodation that meets their basic requirements, make the stay in unorganised informal rental housing, a not so-favourable option for millennials.
The absence of an organised rental housing market has been an under-explored opportunity for the co-living market to emerge across select urban cities in India.
Meeting the growing demand from the younger generation, co-living provides:
- a personal space that offers quality stay, powerful sense of community and privacy;
- a choice in the living arrangement of either a single or shared room, with shared common spaces for social interaction;
- a place potentially free of gender, religion or any other form of discrimination;
- a place with low entry costs and flexible deposits, no brokerage and affordable rents in highly desirable urban centres;
- a place without a fixed tenure on the lease, giving the tenant freedom to exit and terminate the arrangement without notice period;
- complete autonomy on entry and exit in the residential premises with no interference from middlemen and landlords;
- tech-friendly, comfortable plush spaces with free Wi-Fi, housekeeping services and modern amenities;
- flexibility in tenure, convenience, reduction in time spent on commuting with easy access to social and physical infrastructure.
A comparison of the costs, facilities and services of co-living spaces and typical rented apartments in India clearly highlights the attraction it has for the millennials.
In the traditional format of renting, a tenant would be required to bear costs of utility bills, groceries and meals, domestic help, furniture and appliances (in case of unfurnished apartments), which adds to the overall cost of living. In comparison, a co-living set-up covers the costs of these additional elements, which, in the end, means that the tenant saves a lot more on extraneous expenses.
The facilities offered in a co-living space can differ among various operators, but a set of standard facilities such as a fully-furnished room, housekeeping services, Wi-Fi, all-inclusive utility charges, 24x7 security, app-based service and communication, and community events in the residential premises are common. Facilities, like meals, kitchen and dining, laundry, parking, gaming room, AV (audio-visual) or music room and gym, are offered at a premium. Some operators even offer add-on services for a terrace garden or deck, library or books on rental or access to a doctor on call.
The co-living market in India is evolving at a rapid pace and there has been positive investor interest at national and international levels in the industry. Today, with the growing demand for organised rental housing in the country, there is a multitude of companies foraying into the co-living market. While most companies offer their services to working professionals and students, some are specifically designed and cater to a select group of people.
Operators such as Stanza Living and Oxford Caps (which has recently been acquired by Abuzz) primarily offer their living spaces for students, while Grexter Living only serves working professionals in Bengaluru (at present). The list of co-living operators in India is growing at a fast pace, with more than 15 such companies presently offering their services across cities.
A change in the housing needs of a major portion of India’s population has driven the need for better, organised and technologically sophisticated rental living spaces in major cities of India. Furthermore, the absence of a robust regulatory infrastructure and the flawed framework of the rent control acts have doubly ensured that consumers will go for options that offer them a better service.
The unorganised nature of the present informal rental market in India offers huge potential for development of co-living spaces, but it remains to be seen whether it would sustain its attractive appeal in the future. Millennials seeking better opportunities in cities and looking for easy access means that the demand for co-living spaces is expected to remain on the rise.
At present, the co-living market is not governed by any regulatory policy and this has given the operators a certain level of freedom to evolve, based on the demands of the market. If allowed to grow in a sustainable environment, the co-living market can truly revolutionise the way millennials make use of rental housing accommodations and also simultaneously prove beneficial to owners and operators of co-living spaces.
With proper support from the government, co-living spaces can truly become a viable alternative of housing for the new generation of Indians. The development of a strong and balanced regulatory policy is also must. A legal and regulatory framework needs to be in place to provide clarity over approvals and licences for co-living operators. This, along with fiscal incentives for developers and operators getting into co-living will allow the market to evolve and grow.
