56% millennials vote co-living spaces in top cities: Knight Frank India

News Point: A stable co-living asset potentially delivers up to 12% rental yield. Sweet spot for rental homes at INR 1.2 – 1.8 lakhs a year. 

Young Professionals, Business Team, Young Entrepreneurs, Expat Professionals, India real estate news, Indian realty news, India property market, Track2Media Research, Track2RealtyKnight Frank India has released a report titled “Co-Living – rent a lifestyle” that suggests 72% of millennials (18 – 23 years) have given co-living spaces a thumbs-upand over 55% respondents in the age group of 18 – 35 yearsare willing to rent co-living spaces.

The survey was sampled across top cities of India, including Mumbai, Bengaluru, Pune, Hyderabad and NCR and received responses from a cross section of people between the ages of 18 – 40 years of age.

The survey also finds that close to 40% of all respondents are most comfortable in paying between INR 120,000 – 180,000 per annumtowards rental housing in key cities of India.

The sweet spot for rentals thus remains at a monthly outflow of INR 10,000 – 15,000.

Other Key findings: 

37% of  private working professionals and 45% of student respondents surveyed were willing to spend between INR 10,000-15,000 on monthly rentals 

Of the total millennials surveyed, 56% were willing to consider co-living spaces for their accommodation requirements

In the 18-23 years age bracket, 72% were willing to consider co-living spaces as an option for accommodation while in the age bracket of 24-29 years, 56% respondents were inclined to consider this option

Proximity to work and social infrastructure remained top priority for millennials while selecting a location while only 5% gave importance to rental costs

Shishir Baijal, Chairman and Managing Director, Knight Frank Indiasaid “Co-living aims to create a community-centered living environment that not only provides privacy in living arrangements but also promotes social contact through community spaces and programs. As an asset class, the biggest driving force behind the rising popularity of co-living spaces are young renters moving to new cities who are looking for easy access and reasonably priced rental accommodation. Though the concept is novel, it’s here to stay, as Indian millennials currently account for 34% of the total population which is expected to increase to 42% by 2025. We feel that with the recent acceleration of growth in migrant population to  key cities, organised players rental housing will be able to bridge the housing gap.”

Co-living inventory presents a lucrative rental income opportunity for developers / owner operators. The study says that a stable co-living facility generates net yield of approximately 12%, whilerental yields from a traditional 1BHK remain at 1.5 – 3%.

Co-living further enhances revenue potential as cost of shared spaces such as kitchen and living rooms is amortised over a greater number of bedrooms than in a traditional residential development.

“The survey conducted by Knight Frank India shows great potential for rental housing in the country. As more and more organised players enter co-living spaces, these are likely to attract institutional funding, assuring better yields to development and operating companies. This will therefore allow funds over time to further diversify their rental yield generating asset portfolios in India beyond office space and retail malls,” Shishir concluded.

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