Rapid urbanisation and evolving lifestyles in India have made co-living an emerging segment in the real estate space. This sector is not just offering affordable and convenient housing solutions, but also introducing a new way of community living for young professionals, students, and migrants.
With rising demand and growing investor interest, co-living has become one of the fastest-growing sectors in the country. Let’s understand its growth trajectory, the driving factors, investment opportunities, and what the future holds.
What’s Happening?
India’s co-living sector is currently at a nascent stage, with only 3 lakh (3,00,000) beds available in the organised segment — just 5% of the total potential demand.
However, according to a report by Colliers, this inventory is expected to grow to 10 lakh (1 million) beds by 2030. This means co-living’s shares could rise from 5% to over 10%.
This growth is being fuelled by increasing urbanisation, a growing youth population, and expanding job opportunities in metro cities. Millennials and Gen Z, in particular, now prefer shared and convenient living spaces over traditional PGs or rented flats.
Why is co-living gaining popularity?
Surging demand post-Covid: After the pandemic, the co-living sector has seen a revival. Demand for co-living beds is expected to reach 6.6 million by 2025 and could touch 9.1 million by 2030.
Low availability, high potential: Currently, the organised sector offers only 3 lakh beds — just 5% of total demand. By 2030, this number could reach 1 million, potentially pushing penetration beyond 10%.
Urban migration and youth needs: Approximately 50 million migrants aged 20–34 are moving to cities for education and employment, creating a huge demand for convenient rental housing.
Massive student housing gap: Enrolments in higher education have surged to 43.3 million, yet colleges and universities can accommodate only 4 million students. By 2025, an estimated 12 million students will require hostel-style accommodation.
India’s Shifting Urban Rental Market
Compared to traditional rentals, co-living is emerging as a more affordable, flexible, and convenient option. In metro cities like Bengaluru, Mumbai, Delhi-NCR, and Hyderabad, co-living spaces are 20–35% cheaper than conventional 1BHK rentals.
For instance, in Bengaluru, the average monthly rent for a single occupancy co-living space ranges from Rs 11,700 to Rs 23,700, whereas a typical 1BHK costs Rs 15,500 to Rs 36,500. Co-living arrangements often include utilities like electricity, water, Wi-Fi, cleaning, and maintenance in the rent — eliminating the hassle of separate bills. Flexible lease terms and lower security deposits also make them ideal for young professionals and students.
What’s in it for investors?
India’s co-living sector is emerging as an attractive avenue for investors. Since 2015, the sector has attracted over $1 billion in investments — thanks to its potential returns of up to 10%, significantly higher than the 2–5% yields of traditional real estate. These investments have helped operators scale quickly and enhance service offerings.
Co-living vs Traditional Rentals
According to Vimal Nadar, National Director at Colliers India, “Robust growth coupled with significant untapped potential presents the co-living sector as an increasingly attractive asset class within real estate contours in India. While leading operators continue to consolidate their presence in the Tier I cities, we are already witnessing steady expansion into select Tier II markets such as Indore, Coimbatore, Chandigarh, Jaipur, Visakhapatnam, Dehradun etc”.
What’s Next?
India’s co-living sector is expanding at a rapid pace. Current demand for co-living beds is pegged at 6.6 million, and this is expected to reach 9.1 million by 2030. The market size, currently estimated at Rs 4,000 crore, is projected to grow over fivefold to Rs 20,000 crore by 2030.
Badal Yagnik, CEO of Colliers India, says, “With rapid urbanization and a high proportion of migrant population, including students & young working professionals, the demand for organized rental housing, especially co-living, is likely to witness strong growth. Significant upside potential is anticipated to provide thrust to investor participation and operator expansion in the co-living sector.”
*The article is for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
