The driver for Co-Living is the young workforce and students who typically shore up to the metro cities for Education, Internships or Jobs. Student housing and Co-Living got prominence in the last few years when Generation Y&Z drove the concepts of shared Economy and commerce. It gave importance to several Co-Living operators like Zolo Stays, OYO Life, NestAway, Hoolive, Stanza Living, Olive Living and many more. However, the concept of “Shared Economy” got severely tested in the era of the Pandemic. Wok from Home and Hybrid working becoming a commonplace had impacted the occupancy in workplaces and Co-Living facilities.
Uncertain economic conditions, loss of jobs, work from home, and migrants returning to their respective hometowns in the wake of the Covid-19 outbreak brought the fledgling Co-Living sector to a grinding halt. Migration to urban areas is the biggest driver of demands for Co-Living spaces. India has witnessed around 35-40 million sqft of Grade-A office absorption every year till 2019. However, in 2020 net absorption fell by 10-15 %, which is expected to remain low in 2021 as well. The unemployment rate also rose to 11.3% during this period. Moreover, there was 10X growth in work from home for the existing work force, resulting in fewer takers for the Co-Living spaces. Situation improved for a while between December 2020 to March 2021 when occupancy was restored to about 45 to 50% in most Co-Living facilities, but soon the second wave put a dampener from Q2 onward.
As the situation stands in Q4 2021, the sector is looking far more optimistic than before. Primary factor is the vaccination which is about to touch 100 cr mark. The unemployment rate is down to 6.8% from the previous high. Hiring by IT companies have gathered pace followed by robust performance of the sector. And on top of it most of the organization are recalling their employees back to the office.
On the student housing front campuses are expected to be buzzing again for the Odd semesters. A survey was done of 150 private institutes across the country. It revealed that the number of migrant students are more than 200,000 in these campuses whereas only 60 to 70 % students are currently being provided with hostel accommodation. Thus, making an untapped market of 60-70,000 potential bed capacity.
Student Housing and Co-Living provides value for money solutions to young migrants who otherwise face many challenges in a metro city to find accommodation in a housing society. There are safety and security concerns apart from various nuisance values created out of cultural differences. The sector is going to gain further strength and momentum as the office occupancy peaks up by 2022.
Co-Living has a long-term potential in the Metro Cities. However, this the time for consolidation in the market. While many players who could not sustain the onslaught of the previous year have exited the business, others took the opportunity to strengthen their position by strategic acquisitions and expansions. The sector will also witness an increasing adoption of technology, innovative pricing, and a better experience of staying. As every challenge also brings some opportunity, the industry will see a turnaround and transformation in the time to come.
About the author
– By Subhankar Mitra, Managing Director – Advisory Services, Colliers India
Subhankar Mitra heads Advisory business in Colliers International India. He has over 23 years of experience pertaining to Strategic Consulting, Market Research, Transaction advisory, Program Management, valuations and other Urban development-related Studies.
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