From bust to boom: Indian coliving is a tale of second chances and smarter money

A typical coliving space, meant for young professionals and students, has private or shared rooms with access to common kitchens, lounges and work areas. Basic setups cover essentials such as Wi-Fi, electricity, housekeeping and security, while premium ones add gyms, game zones, and curated community events. Rents usually range from ₹10,000 for simple accommodations to ₹30,000 or more for fully furnished, amenity-rich spaces in prime locations.

The reality was far less rosy for Ganeriwal who moved into coliving startup Colive’s property in the Bommanahalli area. Broken geysers, daily electricity cuts despite the promise of 24-hour backup, and endless service delays gave him headaches. But the real nightmare began after he moved out.

Ganeriwal says he followed every checkout rule, vacated early, and was assured his ₹9,000 deposit would be refunded in 15 days. Instead, he received a message demanding an extra month’s rent over a notice-period technicality. He never got his deposit back. Complaints filed through service tickets, customer care, even consumer forums, went nowhere.

“It was clear before I moved in that only 15 days’ notice was required. I gave 30 days and still they refused," he said. “The property manager said there wouldn’t be an issue, but the company kept demanding more money."

Ganeriwal’s story isn’t unique. Online forums are filled with similar tales of withheld deposits, arbitrary deductions, and unresolved complaints against operators such as Colive, Settl and Stanza Living, among others, by clients alleging they have been taken for a ride.

Speaking to Mint, Colive founder Suresh Rangarajan claimed that a few clients sometimes blackmail operators.

“There are certain rules around the notice period, contracts, damages—that’s where disputes happen. When we make deductions, many customers go online and demand refunds in full. We cannot keep on bending," he said. “It’s become a social media blackmail economy."

Despite such conflicts, demand for coliving hasn’t disappeared. Young professionals and students still flock to these spaces for affordability and convenience. The model, once touted as the future of urban housing, attracted millions in venture capital dollars, sky-high valuations, and even IPO dreams. But operational headaches, customer discontent, wafer-thin margins, and the pandemic’s funding freeze have left the sector battered. Venture funding shrank from a high of $122 million in 2021 to a paltry $4 million last year.

Now, a second act may be playing out. Colive recently raised $20 million in a Series B funding round led by Bain Capital, with Sattva Group participating. This was its first fundraise in six years. Chennai-based Truliv bagged seed funding just months ago and is lining up another round. Your-Space, EzStays and Hooliv have also drawn fresh capital.

Behind the numbers

Coliving in India first took shape around 2016-2017, when startups such as Colive and Stanza Living set up shop. The promise was compelling: affordable, ready-to-move-in housing for students and young professionals, powered by technology that would streamline everything from bookings to maintenance. Investors loved the pitch, especially the “tech" spin, and poured money into the sector.

Nearly a decade later, the sheen has worn off. The realization is clear: coliving may borrow tools from tech, but at its core, it’s a real estate business with all the complexities that come with it. Valuations have since corrected. Yet, investors are once again circling back. The question is, why? Is this a genuine turnaround, wishful thinking, or a strategic bet that something has changed in the market?

One reason is the scale of the opportunity. The co-living market, pegged to be worth around ₹4,000 crore in 2025, is projected to grow fivefold to nearly ₹20,000 crore by 2030, according to a recent report by real estate consultancy Colliers. The demand drivers are strong: migration into cities, a growing student population, young professionals seeking furnished and flexible homes, and the return of hybrid and back-to-office work.

Demand, experts say, has never been the problem, and likely never will be. The real challenge has always been operations: running the model efficiently in a space notorious for high burn.

“With over 30 million people migrating to urban centres every year, the demand is undeniable. What’s different now is that operators are more disciplined, prioritising occupancy, pricing power, and operational efficiency, which gives investors greater confidence in the sector," said Ashish Bhatia, co-founder of Finvolve, an investor in EzStays.

That shift in discipline is starting to show in company financials. Several operators doubled their revenues in FY24 over the previous year, with some decreasing losses and one even saying it has turned profitable, a far cry from the early days. Zolostays, for instance, more than doubled its revenue from ₹99 crore in FY23 to ₹209 crore in FY24. HelloWorld’s revenue rose 69% to ₹110 crore.

The Colliers report suggests the room to grow is enormous. Organized coliving inventory—around 300,000 beds in 2025—is projected to nearly triple to one million by 2030.

Dhaval Hemani, co-founder, Sarvam Properties, claimed that demand, at six-seven million beds, is way higher than current supply and will likely exceed nine million. “That supply imbalance is what’s pulling investor attention back," he asserted.

The new investor math

Where the sector stumbled in its early years was in cracking unit economics. Expensive properties and operational complexities squeezed margins, even as revenues rose steadily. Until this year, no startup had managed to post a profit—Truliv now claims to be the “first profitable coliving startup".

The shift in strategy is clear: instead of aggressively adding new beds, operators are now focused on driving higher margins from each one. Investors, in turn, are applying much stricter evaluations.

For Finvolve’s Bhatia, the rationale for investing in EzStays was simple. “If you can deliver predictable yields for property partners and an engaging experience for tenants, you create a sticky business model with strong retention," he said.

That means digging deeper into fundamentals. As an investor, Bhatia tracks cohorts, average length of stay, and contribution margins closely before backing a company. “Unlike SaaS, you can’t just look at revenue multiples. For coliving, occupancy, average revenue per bed, churn and Ebitda are the key levers," he said. “We value businesses on a mix of revenue run-rate and operating profitability, with a heavy emphasis on unit-level economics. Consistent 85–90% occupancy and positive contribution margins are non-negotiable."

By contribution margins, he means sales revenue after deducting variable costs.

If managed well, operators can achieve 20-25% gross margins at scale and an 8-12% Ebitda margin (Ebitda refers to earnings before interest, taxes, depreciation and amortization).

“While it’s not a hyper-margin business, the predictability of recurring revenues and strong cash flows make it highly attractive. The margin story improves significantly once operators reach a certain density in key cities," Bhatia added.

Ankur Mittal, co-founder and chief operating officer of Inflection Point Ventures (IPV), an investor in companies such as Settl and Homversity, points to another problem in the sector’s early years. “When you are flush with cash, some bad business practices come in and pricing is not correct. So, you are offering five-star services at one-star, two-star rates. Of course, you will have very high occupancy. But that will not create a sustainable business model. Now, people are more conscious about right pricing," he said.

For him, the real test of sustainability is at the property level. “I think each individual hostel/property has to be profitable. That is the only way the sector will grow," he said.

Customized design

So far, most coliving operators in India have followed the retrofit model of taking existing residential buildings or hostels on lease and refurbishing them into shared living spaces. While this allowed a quick scale-up, it often led to design limitations, higher maintenance costs, and inconsistent unit economics. Increasingly, however, companies are shifting to a build-to-suit model, where developers construct properties specifically designed for coliving: optimized layouts, shared amenities, and operational efficiencies built in from day one.

These properties are typically taken on long-term leases by coliving operators, sometimes with fixed rentals and in other cases through revenue-sharing arrangements, giving developers predictable yields while operators get spaces aligned to their business model.

“People are moving toward the build-to-suit model and the quality of assets being chosen is also becoming much better," said Rohit Reddy, co-founder of Truliv. “Every square inch, every square foot of the property is planned for your needs. That is getting a better realization and better efficiency into the system."

Truliv, for example, engages with property owners interested in building coliving assets and co-designs these spaces from scratch. “Or we build these assets—these are small studio apartments and rent yielding assets because the guarantee is from us—and sell them to retail investors or end customers and then lease them back for a long tenure," Reddy explained.

These two models, co-designing with developers or building and leasing back, are becoming common in the build-to-suit space, say operators, but with no data to support the claim.

The ‘PropCo-OpCo’ model is helping institutionalise this shift. In coliving, a PropCo (property company) owns the assets or the buildings while an OpCo (operating company) handles the marketing, tenant acquisition, community, and facility management.

Real estate major Sattva recently launched its own PropCo vertical to address the supply gap. Shivam Agarwal, vice president of strategic growth at Sattva Group told Mint that in partnership with Bain, it is buying smaller properties near tech parks in India’s top eight cities and developing 100,000–400,000 square feet assets, all purpose-built for coliving.

“It’s a residential rental income model, but when planned efficiently, the yields make sense. If you take existing buildings and turn them into coliving, the efficiency is not high enough for it to make economical sense," Agarwal said.

The math is simple. In Bengaluru, a 2,000 square feet 3BHK (bedroom-hall-kitchen) may rent for ₹50,000–55,000. Coliving operators can instead create six units from the same space, each rented for ₹15,000 or so—the realization nearly doubles.

The valuation reset

While investments are flowing back into coliving, they are not at the same level they were a few years ago. Valuations, once inflated, have now corrected sharply. Indeed, investors and founders say they may even be below fair levels.

This reset, many argue, is healthy for the sector. “The froth is gone and the reset acts as a quality filter, favouring experience-led operators with stabilized occupancy, clear payback periods, and diversified revenue. It’s also pushing healthier structures: OpCo–PropCo alignment, yield-share, and management models over heavy leases, so balance sheets carry less risk," said Aviral Gupta, chief executive officer of Zo World, a coliving startup. The way companies are valued has also changed. Earlier, tech-style multiples drove the hype, but that’s no longer the case. “It’s a little between tech and real estate, but closer to real estate than tech at this point," said Sattva’s Agarwal.

Stuck on the hard parts

Despite easier access to capital and improving financials, coliving still faces steep hurdles. Supply remains the biggest constraint. Quality, large-scale inventory is scarce, and even with build-to-suit gaining traction, delivery takes years. “It takes two to three years for supply to happen. Somebody has to be convinced. One, it’s a large capital investment. Two, it takes time to build," said Colive’s Rangarajan.

At the same time, customer complaints, from withheld deposits to poor maintenance, continue to erode trust, showing that operators haven’t fully cracked the service experience. And most importantly, no company has yet managed to achieve both scale and profitability. Demand may be strong, but building a truly sustainable and trusted coliving business in India is still very much a work in progress.

Most operators are now talking about profitable growth and even hint at IPOs in the next three to five years. While that may still be some distance away, the path to profitability is clearer than it was a few years ago, and that clarity has grabbed investors by the eyeballs.

Still, as IPV’s Mittal cautioned, “There’s a focus on profitability now, but people may again start putting money behind cash-burning models. The cycle changes, people forget pain."