In India, millennials account for approximately 47 percent of the country's working-age population. They are ideally the target group for co-living spaces. With 60 percent of these being outstation students, the demand at present for co-living stands at around 1,00,000 beds across the country. Co-living space in India enjoys a worth of Rs 85 crore. This accounts for 2.5 percent of the entire rental market. Going by the industry expectations, the industry is likely to grow by double in the next three years.
Before the outbreak of novel Coronavirus, the government policies were not in place. Shared accommodations, the majority being paying guest (PG) facilities, were running without definitions. Once the news of COVID-19 took everyone by surprise, the landlords who were the PG owners, without giving further notice, asked their tenants to vacate the space with immediate effect. The reflex from these landlords was a knee jerk reaction for the students. During such times, people are supposed to be united, but sadly the reality is far distant.
The grim situation, however, can be a boon for the co-living industry. The industry is likely to witness increased demand from working millennials and students who will now opt for a professionally-led and managed accommodation. The co-living operators, catering to both working professionals and Student housing will see a surge in demand post the COVID-19 era for two reasons. First, they have firm policies towards maintaining safety and hygiene at their places. Second, the operators tend to hands out a contract to the tenants, which is something that was missing in the paying guest format. Having a safe and hygienic environment will now become a priority before renting shared accommodations.
There may be a temporary blip in fundraising. It is because of the primary reason that many will try to see how the industry or economic feasibility changes. We, as industry players, foresee this uncertainty to last for a few months till the expectations of the students and millennials are understood and met. In the long run, shared accommodation spaces will emerge and become an organised sector. We anticipate that while co-living will continue to strive in metropolitan cities such as Bangalore, Pune, Delhi NCR, Hyderabad, and Chennai; student housing will see more establishments in Tier-2 cities. This is because a lot of new universities are establishing themselves in these markets.
Going ahead, operators will focus more on built-to-suit projects that have all the legal compliances fulfilled. The design will be focused more on creating a clean, hygienic, and equipped work-from-home kind of an environment. The operational SOP will have to change to accommodate these changes.
Overall, co-living and student housing will emerge stronger than before with definite potential to double the market size by 2025.