Aiming to tap the potential in the shared-living space, The Chatterjee Group (TCG) is considering entering the trending co-living market in India via its real estate arm.
Various models, such as lease-and-operate and management contract are being considered.
Under the lease-and-operate model, TCG may rent out its inventory to co-living operators, who in turn will be responsible for managing and running the property. Under the management contract model, the responsibility of managing the returns from investment will lie with TCG while the co-living operator will be the custodian of the property and will be entitled to a commission.
According to a source familiar with the development, TCG is internally assessing the possibility of partnering with aggregators for this new venture or entering the marketing on its own.
The source said TCG has enough inventory available to enter this segment and the new venture is likely to be piloted in Pune before TCG considers a roll-out in other cities.
“The co-living business vertical will operate under the real estate arm and considering the inventory levels and the market potential for shared living, TCG opted to enter this space,” the source told this newspaper.
A mail sent to a TCG real estate official on the subject went unanswered.
TCG Real Estate is already into the residential segment with two projects -– The Cliff Garden and The Crown Greens in Pune -- and has several commercial complexes in Delhi, Kolkata, Mumbai, Chennai, Pune and Bengaluru.
A Ficci-JLL report says the country’s co-living market is expected to increase at a CAGR of 17 per cent in the next five years to nearly Rs 1 trillion. Delhi NCR will constitute nearly 40 per cent of this potential market opportunity by 2023, followed by Mumbai at 25 per cent.
Mainly targeted at students, young single professionals and the elderly to some extent, co-living has been prevalent under different formats and names, and became popular with the entry of organised players such as Oyo Life, Zolo Stays and CoLive, and inflow of institutional capital.
Industry officials note that characteristics such as plug-and-play living, use of technology, convenience, and community living are finding favour with millennials and young professionals. Migrant officials from IT, start-ups, investment banks, corporates, FMCG and automobile companies are preferring the co-living model.
According to a study by CII and Anarock, co-living, co-working and student housing yield 7-11 per cent higher rentals than traditional models, making this sector lucrative. The report stated that the top six co-living players currently have 118,000 beds priced at Rs 6,000-30,000 a month.
The CII study says there are hardly any formalities or permissions currently to seek for a new entrant enters the co-living market. As the number of young professionals, migrant workers, and digital nomads increases, the demand for co-living is likely to be sustained in the coming years.
Cities such as Bengaluru, Gurugram and Pune were the first to witness the emergence of co-living rental housing. It is now also taking root in smaller cities such as Lucknow and Jaipur and other cities with a large student and millennial workforce populations.