The co-living segment has recovered from the onslaught of the COVID-19 pandemic and demand for rental housing has surged as offices and colleges reopened, according to major industry players.
The cohousing industry, which provides managed rental housing to professionals and students, has been severely impacted over the past two fiscal years due to the pandemic and shutdowns that have caused reverse migration from cities.
It was one of the most affected sectors due to the closure of offices, schools and colleges for a long period. Many small operators have even closed their businesses.
Senior officials from major co-living operators such as Stanza Living, CoLive, Housr and Settl said demand for beds at their co-living centers has rebounded to pre-COVID levels or even higher, encouraging them to expand operations.
Rentals per bed have also improved after a plunge during the pandemic period, they added.
Real estate consultants Housing.com and Colliers India expect a significant increase in supply and demand as well as investment in this segment in the coming years.
Interestingly, the demand for single occupancy rooms has increased as working professionals need hygiene, privacy and adequate space to work from home.
On the current market scenario, Co-Founder and MD of Stanza Living, Anindya Dutta, said, “The pandemic has indeed impacted demand, but with the opening up of economic activity, the sector is more broad and our company in particular, have experienced a very strong and clear recovery. We have already exceeded our pre-COVID demand peaks by more than 3.5 times. Housr co-founder and CEO Deepak Anand said the company saw a resurgence in demand for beds after offices reopened and was already operating at pre-COVID levels.
Abhishek Tripathi, co-founder of Settl, said the company was operating at a pre-pandemic level and was looking to expand its business.
Suresh Rangarajan, Founder and CEO of CoLive which has 30,000 beds in Bengaluru, Chennai, Hyderabad and Pune, said demand has exceeded pre-COVID levels and will increase further as many offices, especially in the IT sector, are n haven’t opened yet.
Optimized by the short to medium term demand scenario, co-living operators are expanding their portfolio and entering Tier II cities. Some of them are also getting into running hostels on school and college campuses.
For example, Gurugram-based Stanza Living, which currently has more than 75,000 beds in 23 cities, has moved into campus facilities management and is receiving many partnership requests from educational institutions.
“Our agility to adapt to external challenges while continuing to create better value for our consumers has helped us become one of the strongest operators in the country with a 60% market share in the hosting space. managed,” Dutta told PTI.
He added that over the past few years, professionally managed accommodation solutions have generated a lot of interest among consumers, disrupting the traditional rental accommodation industry.
“In the context of the pandemic, there has been an even stronger consumer sentiment towards high-quality, safe and hygienic living options like ours,” he added.
On the new post COVID trend, Anand of Housr said there has been a major shift in demand towards single occupancy rooms from double occupancy.
Previously, 60% of demand came from double occupancy, but now it’s the other way around, he noted.
“There has been a significant change in the way of life. People are willing to pay higher rental rates for private and hygienic rooms,” Anand said.
Echoing these views, CoLive’s Rangarajan said demand for single-occupancy rooms has increased, leading to a supply shortage.
“Because of the hybrid working model, people want a full room to do office work. They need privacy. The hygiene factor is also there,” he said, adding that the company offers beds at Rs 8,000 for double occupancy and Rs 16,000 for single occupancy.
Regarding future expansion, Anand of Housr said the company had signed long-term rental agreements during the pandemic to add several properties at 60% of their pre-COVID rates.
Housr currently has over 4,000 occupied beds and aims to reach 12,000 beds across India by March 2023.
At Housr, which currently only operates in Tier 1 cities, the average price per bed in a twin room is between 17,000 and 19,000 rupees. The average price per bed for a single occupancy room is between Rs 35,000 and Rs 40,000, depending on the location.
“There is enormous growth potential for the cohabitation segment in our country. By 2024, the market size is expected to double,” Anand said.
Abhishek Tripathi of Settl said the company has benefited from the availability of quality supply at a favorable price.
“On the demand side, we are also seeing a shift in the mindset of customers, where they are willing to pay more for quality hosting coupled with community experiences,” he added.
Ankita Sood, head of research at Housing.com, said the cohousing segment in India has broken the boundaries of conventional rental and gained momentum as a quality alternative to dorms and hostels.
The segment has taken a hit due to reverse migration, induced by the COVID-19 pandemic, which is now ebbing as businesses and educational institutions resume work, she added.
“We now see things looking up for the segment with expansion plans and a substantial investment of $104 million in private equity for cohousing companies in 2021,” Sood said.
Leading co-living space players are expanding their footprint in key cities and increasing their facilities to raise the bar for shared living with quality services, safety and security, she added.
In December, Colliers India published a report stating that the number of beds fell to 1.3-1.4 lakh in 2020 from 2 lakh in the previous year, while the occupancy level fell to 40-60% .
In calendar year 2021, supply rebounded again to over 2.10 lakh beds and occupancy improved to 70%. The number of beds could reach 4.5 lakh by 2024, the consultant added.
Besides these four operators, Zolostays, Your-Space, Coho, NestAway and the Embassy group are other major players in the co-living segment.