Investing In Co-Living And Co-Working Commercial Projects May Be More Profitable As They Yield Higher Rent

Reports Suggest Co-Working, Co-Living Fetches Higher Rent

A research conducted by the Confederation of Indian Industry (CII)- ANAROCK suggests the Co-Working and Co-Living, Student Housing yields higher rents that the traditional rent models. According to the report, Co-Working and Co-Living, Student Housing can fetch rent 7% – 10% higher than the 3% average yield from the traditional model.

Anuj Puri, Chairman, ANAROCK was quoted in the report “Co-living, student housing and senior living are fundamentally innovative and specialised residential assets, but with varied business models. The report highlights that a majority of millennials today prefer co-living over traditional rental models”.

Adding, “Co-living, student housing and senior living are the next evolutionary step in the residential real estate domain, while co-working has evolved from traditional office real estate.

The change in social dynamics, highly enabled startup environment, need for quality housing for the elderlies, and the increase in interest in pursuing higher education by the student populace are the factors which are driving this evolution.

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The new Real Estate rental asset classes are attracting fundings from private developers, equity players, and individuals. Startups have received the most advantage from the funds which enabled them to scale up their operations in various cities.

Puri said, “Likewise, ANAROCK is actively tapping the considerable opportunities of alternate asset classes like co-living, student housing and K-12 schools”. The report says that the top 6 Co-Living companies have the capacity of 1,18,000 beds in the country, which are priced between Rs. 6,000 to Rs. 30,000. The 13 top student housing companies in India have 1,50,000 beds and these companies are fetching investments from both overseas and domestic firms.

The major investors prefer cities like Mumbai, and Bengaluru among others while the senior housing growth comes from the ties-2 and tier-3 cities which are generally just outside the top cities. Some of the tier-2 and tier-3 mentioned in the report are Neral (Mumbai), Bhiwadi (NCR), Devanahalli (Bengaluru), and Telagaon (Pune).

The report also said, “While co-working as a segment has flourished in India, there are interesting differences in how local and global players address it. As of today, domestic co-working operators have restricted their presence to tier-1 cities, while global players are also penetrating into tier-2 and 3 cities”.

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