Real estate market to observe new growth in Co-living and Co-working spaces.

By Abhay Shah, Realty Quarter

The increasing co-living and co-working sections of alternative real estate asset classes will further improve their footprint. In addition to 5.7 mn beds from past rates of Rs.458bn and 3.6 mn in 2018, the Indian co-living industry is predicted to deliver Rs.1 trillion by 2023 in a business opportunity.

“The changing nature and human experience of workplaces have become a core of the office sector worldwide. The shift of view between millennia to sharing has rendered the co-living notion popular instead of owning it. Renting provides flexibility and savings to all groups-businesses, startups, entrepreneurs and millennia,” said Samantak Das, Chief Economist and Head of Research & REIS at JLL India. JLL-FICCI reports that 12%, of the office rental industry, is already represented by the co-working market in the first half of CY2019, compared to 8% in 2018. From 2017 to the first quarter of 2019, the segment consumed 6.9 mn sq ft of total space.

“A bulk of India’s workers today is millennials. They are adaptive but expect a significant shift in working conditions. Agile workplace and dynamic atmosphere help fresh people to better succeed,” said Sanjay Dutt, Chairman, FICCI Real Estate Committee & MD & CEO, Tata Realty and Infrastructure.

According to the reports, While the co-working concept has quickly been accepted in the metro, the Tier II cities, like Indore, Ahmedabad, Bhubaneshwar, Kochi and Jaipur, have opened up for such a new concept. The segment offers an enormous business opportunity for all – developers and occupants – by benefiting from cost reduction and shared amenities.

“The co-working sector in the nation has come a long way and now has a maturity curve and getting more enduring. Operators now give occupiers several formats within this mature market. These vary from whole buildings dedicated to co-working spaces to build-to-suit co-working offices within the traditional workplaces,” said Juggy Marwaha, Executive Managing Director, JLL India.

The report stated that the Co-working provides a 20-25% price savings in comparison to traditional office space rental. Co-living provides attractive returns, 2-4 times higher than the standard residential yield of 2-3%.

“Indian office and residential property market are likely to develop larger and better with these two creative segments. Stakeholders must, however, face current difficulties, such as data privacy concerns, conservative property owners’ approach and the appropriate supply found through co-working and co-living,” Das added.

The sector’s progress for alternative rental assets in the nation is driven by factors like affordability, comfort and community-based living. The demand has made the industry intriguing for organized operators, property owners and private equity investors, however, supply is still a task.