The sector of hostels or co-living, a concept gaining currency among the millennials of the country, has the potential to touch ₹1 trillion in business by 2023, according to a report of an international property consultant.
At present, the co-living space in the country is worth around $12 billion (or equivalent to ₹83,600 crore), according to the report by Knight Frank in a study commissioned by the Tamil Nadu Infrastructure Fund Management Corporation (TNIFMC) for building working women’s hostels in the State.
In 2018, the co-living market in the country was estimated to be of 3.6 million beds, accounting for 2.6% of the entire rental market. In four years, this would go up to 5.7 million beds, which would be 8.3%.
Noticing an “overwhelming potential” in the market, developers have shown interest in owning and managing such accommodation by themselves. It is a win-win situation for landlords too as the rent yields 2–4 times rent the traditional models of letting properties can provide.
Explaining the reason behind the growth of the sector, the report refers to a large scale in-migration in urban centres, putting the limited housing stock under pressure and driving rental prices higher. “The idea of co-living is to create an affordable, community-centred convenient environment that not only provides privacy but also social contact through community events,” the report says.
Identifying young renters as the “biggest driving force” for the co-living sector, the consultancy firm has estimated that 34% of India’s population falls under the age group of 18-35, which is called millennial. By 2025, the share will go up to 42%.
Broadly, there are two types of co-living models in the country: “lease and operation” and “full ownership and management of operations.” Domestic players such as Zolo Stays, Aarusha Homes and StayAbode have “marked their presence” in the co-living/hostel industry, according to the report.
Barring Aarusha Homes, which launched its work in 2007, many other players started their operations three or four years ago. In general, the occupancy rate is of the order of 90% to 100%
The report also deals with the Central government’s scheme for working women’s hostels and says that a hostel developed by the Pune Cantonment Board last year, is considered as “one of the best cases” for the implementation of the scheme.
The consultant has recommended to the TNIFMC to develop hostels in Vadapalani, Tiruchi, Guduvanchery and Hosur.
The State Social Welfare and Nutritious Meal Programme department has planned to approach the Centre for this purpose.
