In the last few years, India has witnessed the emergence of a new segment within both the residential as well as commercial real estate sectors: shared spaces. The concept of co-living and co-working spaces has been around in the western countries for a while, but it has gained traction in India only in the last few years. Currently, there are more than 50 companies offering co-living spaces, and more than 100 are in the co-working segment in India.
Real estate developers started entering the shared spaces segment, following subdued demand in the residential segment. “While the traditional housing segment will witness slow-paced growth, alternate segments like co-living, fractional ownership in housing real estate is expected to gain momentum in 2020," said Honeyy Katiyal, founder, Investors Clinic, a real estate consultancy firm. Fractional ownership refers to a large number of people jointly owning a property.
The shared space segment is attracting not only customers but investors as well. A few aggregators have also forayed into the segment to make the search and comparison easier for potential customers. Read on to find out if this new-age option is right for you.
Shared living spaces
It’s been a while since shared living spaces—co-living or student housing—started showing up in the Indian real estate market. Co-living is a shared facility and is known as student housing when it is offered exclusively to students. A January 2020 report by PropTiger.com, Co-Living Segment: A Boon to India’s Real Estate Sector, estimates that co-living is set to become a ₹2 trillion market in major Indian cities by 2023. “The demand for such spaces continues to grow among the country’s students and ‘single’ working population. The segment also provides a great opportunity for real estate developers to monetize unsold inventory," said the report.
As far as student housing is concerned, there is a need for organized companies to foray into the space. According to a report by CBRE, The Indian Student Accommodation Industry, The Herald of a New Chapter, as of now, “Only one hostel bed is available to six students enrolled for higher education in India."
Shared working spaces
Similar to co-living spaces, co-working spaces are workspaces shared by different entities or firms. According to various reports, co-working companies are now the major occupiers of office spaces. A report by Colliers International India, a real estate consultant, India Market Outlook 2020, said, “Flexible workspaces have grown rapidly in India since 2017, with the sector garnering 18% share in total leasing in 2019. In 2020, we believe that the flexible workspace market should start seeing consolidation, as larger flexible workspace operators with financial discipline acquire smaller companies."
Despite the slowdown in the economy, this segment is attracting tenants and many believe that it will continue do so. “This segment is recession-proof. During a slowdown, companies don’t want to spend on infrastructure or get into long-term leases. In such a situation, shared offices make more sense for businesses," said Nakul Mathur, managing director, Avanta India, an NCR-based co-working space provider.
Many experts are of the view that soon large companies will also start preferring co-working spaces. “In 2020, more large companies will opt for flexible co-working spaces for their short-term expansion plans," said Anuj Puri, chairman, Anarock Property Consultants Pvt. Ltd.
Supply within the segment has also increased to tap the growing demand. According to an estimate by Anarock, “At the end of 2018, total co-working supply was between 7 -7.5 million sq ft. area—and crossed 12 million sq ft. by the end of 2019. The top seven co-working players have more than 350 centres across India, and the number is set to double or treble in the next two years."
The shared segment also offers a good opportunity to owners with properties in locations where such spaces are in demand. According to the PropTiger’s report, “Co-living fetches better yield than residential property. Rental yield of co-living spaces can go as high as 8-11%, compared to the average yield of 1-3% of residential properties."
If you are a student or a young professional looking for a co-living space, or a freelancer, startup or a company looking for a co-working space, you can use one of the platforms offering aggregator services to search and compare available spaces. For instance, Housing.com has a separate section—PG/Co-living—for those looking for co-living spaces. Compare the location, prices and amenities on offer. Some of the service providers also offer trial services or free stay for a few days. Rents can vary, but like regular rentals, there is often some room for negotiation, so you can bargain for a good deal.