Co-living has become a must-have and a massive investment opportunity for investors.
Over the next few years, India’s Co-living segment is expected to have a retrieval in occupancy due to the expected growth in the workforce, migration to urban centers for jobs, the unstructured shared living sector, and the growing student population increasingly yearning for the organized modern co-housing model.
It is expected that the Co-living Market in India is expected to cross the $1 billion mark, by 2025 strongly driven by the student population preferring affordable housing with amenities. The projected growth chart depends on increasing demand from the industry’s largest audience and the rising number of players in the industry to meet these demands. The sector is full of possibilities, but there are only about 10 major players in the current market. The list includes CoHo, CoLive, Zolo Stays, Oyo Life, Stay Abode, Square Plums, Stanza, and SimplyGuest to name some.
Reputable developers are slowly expanding their market supply, by entering the co-living segment. Not only does it consolidate the potential growth of the co-living segment, but it also means that developers are slowly starting to crawl out of the crushing cash crunch that had befallen them – paralyzing all their projects, and other functions, by capitalizing on the growing demand for co-living spaces, and the potential rental yield.
How can real estate investors capitalize on Co-living to create long-term investment?
Why would investing in a property that can double as a co-living apartment be a good move, investment-wise? Let’s have a look.
- High Rental Income
If an individual leases out their property to a co-living operator, it guarantees them a high rental yield uniformly, which is something regular leasing out may not do.
- Consistent Rentals
Another advantage is that the Co-Living tenants are usually Working professionals or College students who have a larger time frame of residence. While co-living provides tenants a flexible stay, such a comprehensive ecosystem at low costs makes it the perfect rental apartment for millennials
- No Associated Risk
As a homeowner renting out their apartment, one of the biggest causes for concern is the sudden departure of your tenant. Should you choose to lease your apartment out to a co-living operator, the onus of finding a replacement for another tenant does not fall on you, and neither does a vacancy threaten your income.
- Managed By Experts
As a asset owner renting an apartment, one of the biggest concerns is when the renter suddenly moves. Not only does it disrupt your normal cycle, but it also adds extra pressure to quickly find alternatives and requires extensive review, negotiation, and paperwork. If you’re renting an apartment to a co-living operator, you don’t have to look for a replacement tenant, and vacancy doesn’t endanger your income.
- Minimal Damages Imposed
A constant worry while renting out an apartment is the wear and tear that will be caused by your tenants. However, if merged with a co-living operator, the operators impose a strict anti damages restriction and penalize heavily for any harm caused to the property, thereby discouraging tenants from being careless.
Key factors driving demand for Co-living
Co-Living is a remarkable asset class within real estate. This operating model allows developers and investors to increase the overall return on their assets, especially in metropolitan areas where space is increasingly scarce and real estate yields have fallen to record lows. At the same time, it not only provides single tenants or bachelors with cheap and comfortable housing solutions but also meets the expectations of the younger generation.
Some of the key factors driving demand for co-living are:
- Efficient building layouts
- Modern marketing and lease management
- Technology and services
- Sense of belonging