Bengaluru: The growing alternative real estate asset classes co-living and co-working segments are set to further increase their footprint.
While co-living market in India is expected to offer a business opportunity of Rs one trillion by 2023 along with the capacity of 5.7 mn beds from the previous levels of Rs 458 bn and 3.6 mn beds in 2018.
“Globally, evolving nature of workplaces and human experience have become core to the office sector. Shift in perception among millennials to ‘sharing’instead of ‘owning’ has made the co-living concept popular. For all groups – corporate occupiers, start-ups, entrepreneurs and millennials – renting offers flexibility and savings,” Samantak Das, Chief Economist and Head of Research & REIS, JLL India, said,
According to a joint report by JLL-FICCI, co-working market already accounts for 12% of the office leasing market in the first quarter of CY2019 from 8% in 2018. The segment absorbed 6.9 mn sq ft of cumulative space from 2017 to first quarter of 2019.
“Today millennials constitute a majority of India’s workforce. They are adaptive but expect a drastic change to occur in the way people work. Agile workplaces and a vibrant ambiance helps the new workforce deliver better,” Sanjay Dutt, Chairman, FICCI Real Estate Committee & MD & CEO, Tata Realty and Infrastructure said.
According to the reports, While the co-working concept has readily been accepted in the metros, Tier II cities are also opening up to this new concept, including Indore, Ahmedabad, Bhubaneshwar, Kochi and Jaipur. With the benefits of cost reduction and shared amenities, the segment provides a tremendous business potential to all – developers and occupiers.
“Co-working segment has come a long way in the country and is now riding a maturity curve and getting more established. Operators within this mature market now offer multiple formats to occupiers. These range from entire buildings dedicated to co-working spaces to built-to-suit co-working offices within the conventional workplaces,” Juggy Marwaha, Executive Managing Director, JLL India said.
The reports mentioned that the Co-working offers cost savings of 20-25% compared to traditional office space leasing. Co-living offers attractive returns, 2 to 4 times higher than traditional residential yield of 2-3%.”
“With these two innovative segments, Indian office and residential real estate is sure to grow bigger and better. However, stakeholders need to address existing challenges such as issues related to data privacy, the conservative approach of property owners and relevant supply observed across co-working and co-living, respectively,” added Das.
Factors such as affordability, convenience and community-led living will drive the segment’s growth for alternative rental assets in the country. However, supply is still a challenge, the demand has made the market fascinating for organised operators, landlords and private equity investors.