Co-living, co-working yield higher rent than traditional models: Report
Rental yields in co-living, student housing and co-working sectors have seen a rise between 7 percent and 10 percent, according to a report by Confederation of Indian Industry (CII) and ANAROCK property consultants.
This is a significant increase from the 3 percent national average rental yield of traditional housing formats.
Anuj Puri, chairman of ANAROCK, said co-living, student housing and senior living are the next evolutionary step in the residential real estate domain, while co-working has emerged from traditional office real estate.
Puri laid out the factors that are giving fillip to this evolution as changing social dynamics, a highly enabled start-up environment, increase in interest in higher education by migratory student population, and the quest for quality housing solutions for senior citizens.
A major chunk of funding in the new real estate rental asset classes have poured in from private equity players, developers and individuals investors.
The infusion of funds has particularly benefited start-ups and continues to scale up operations in multiple cities.
Puri said ANAROCK is actively tapping the considerable opportunities of alternative asset classes like co-living, student housing and K-12 schools.
“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,” he added.
The report mentions that a majority of millennials these days opt for co-living over traditional rental models.
At present, the top 6 co-living players have 1.18 lakh beds in India priced between Rs 6,000 to Rs 30,000 per month. It report said that 13 prominent student housing brands are presently having 1.5 lakh beds across the country. They are drawing investment both from domestic and global institutions.
Currently, major investors are opting for Mumbai, Pune and Bengaluru. Senior housing growth is coming from outskirts of top cities and tier-2 and tier-3 cities like Bhiwadi in the national capital region (NCR), Neral (Mumbai), Telagaon (Pune), Devanahalli (Bengaluru), Mysuru and Coimbatore, the report added.
Senior living has tremendous potential in the country majorly due to improvement in life expectancy to 68.8 years in 2018.
The report said that the government’s initiatives to make data localisation compulsory will ensure a promising future for data centres in the country. The Union Budget 2020-2021 proposal to roll out a new policy for building data centre parks underscores the importance and relevance of this promising asset class.