The growing co-living and co-working segments, which continue to disrupt the traditional real estate space in the country, are set to further increase their footprint, according to two separate JLL-FICCI reports released today.
According to the report, Co-Living – Reshaping Rental Housing in India, the rising demand for shared renting will propel the market and offer a business opportunity of INR one trillion by 2023 along with the capacity of 5.7 mn beds from the previous levels of INR 458 bn and 3.6 mn beds in 2018.
According to the report, Co-Working – Reshaping Indian Workplaces, demand from corporates, startups and entrepreneurs has resulted in a huge jump in the co-working share in total office leasing. The s hare has risen to 12% in the first quarter (January-March) of 2019 from 8% level seen in 2018, it added. 6.9 mn sq ft of cumulative space has been absorbed by co-working segment from 2017 to first quarter of 2019, it said.
The two reports were released at a JLL-FICCI conference, themed, ‘The Future of Indian Real Estate: Conference on Co-working and Co-living spaces’.
Sanjay Dutt, Chairman, FICCI Real Estate Committee & MD & CEO, Tata Realty and Infrastructure Ltd. said, “Today millennials constitute a majority of India’s workforce. They are adaptive but expect a drastic change to occur in the way people work. Agile workplaces and a vibrant ambience helps the new workforce deliver better. While the concept has readily been accepted in the metros, Tier II cities are also opening up to this new concept, including Indore, Ahmedabad, Bhubaneshwar, Kochi and Jaipur.”
Juggy Marwaha, Executive Managing Director, JLL India said, “Co-working segment has come a long way in the country and is now riding a maturity curve and getting more established. Operators within this mature market now offer mul tiple formats to occupiers. These range from entire buildings dedicated to co-working spaces to built-to-suit co-working offices within the conventional workplaces. With the benefits of cost reduction and shared amenities, the segment provides a tremendous business potential to all – developers and occupiers.”
Samantak Das, Chief Economist and Head of Research & REIS, JLL India, said, “Globally, evolving nature of workplaces and human experience have become core to the office sector. Shift in perception amongst millennials to ‘sharing’ instead of ‘owning’ has made the co-living concept popular. For all groups – corporate occupiers, start-ups, entrepreneurs and millennials – renting offers flex ibility and savings. Co-working offers cost savings of 20-25% compared to traditional office space leasing. Co-living offers attractive returns, 2 to 4 times higher than traditional residential yield of 2-3%.”
“With these two innovative segments, Indian office and residential real estate is sure to grow bigger and better. However, stakeholders need to address existing challenges such as issues related to data privacy, the conservative approach of property owners and relevant supply observed across co-working and co-living, respectively,” added Das.
Vijay Rajagopalan, Head – Alternatives Business, JLL India said, “Demand from millennials, rapid urbanization of our cities and the presence of a large share of young and middle-income people’s group is already making a strong case for the emergence of the shared rental market in the country. The co-living segment is therefore set to grow many-fold. Factors such as affordability, convenience and community-led living will drive the segment’s growth. While supply is still a challenge, the demand has made the market fascinating for organised operators, owners/landlords and private equity investors.”