56 per cent of millennials willing to consider co-living spaces in top cities: Knight Frank

• A stable co-living asset potentially delivers up to 12 per cent rental yield 
• Sweet spot for rental homes at Rs 1.2-1.8 lakh a year

Knight Frank India has launched a report titled ?Co-Living - rent a lifestyle.? The report, which is based on a survey, observes that 72 per cent of millennials (18-23 years) have given co-living spaces a thumbs-up and over 55 per cent respondents in the age group of 18-35 years are willing to rent co-living spaces.The survey was undertaken across top cities of India, including Mumbai, Bengaluru, Pune, Hyderabad and NCR and received responses from a cross section of people between the ages of 18-40 years.

The survey also observes that close to 40 per cent of all respondents are most comfortable in paying between Rs 120,000-180,000 per annum towards rental housing in key cities of India. The sweet spot for rentals thus remains at a monthly outflow of Rs 10,000-15,000.

Other key findings:

• 37 per cent of  private working professionals and 45% of student respondents surveyed were willing to spend between Rs 10,000-15,000 on monthly rentals.
• Of the total millennials surveyed, 56 per cent were willing to consider co-living spaces for their accommodation requirements.
• In the 18-23 years age bracket, 72 per cent were willing to consider co-living spaces as an option for accommodation while in the age bracket of 24-29 years, 56 per cent respondents were inclined to consider this option.
• Proximity to work and social infrastructure remained top priority for millennials while selecting a location while only 5 per cent gave importance to rental costs.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said ?Co-living aims to create a community-centred living environment that not only provides privacy in living arrangements but also promotes social contact through community spaces and programmes. As an asset class, the biggest driving force behind the rising popularity of co-living spaces are young renters moving to new cities who are looking for easy access and reasonably priced rental accommodation. Though the concept is novel, it is here to stay, as Indian millennials currently account for 34 per cent of the total population which is expected to increase to 42 per cent by 2025. We feel that with the recent acceleration of growth in migrant population to  key cities, organised players rental housing will be able to bridge the housing gap.?

Co-living inventory presents a lucrative rental income opportunity for developers or owner operators. The study says that a stable co-living facility generates net yield of approximately 12 per cent, while rental yields from a traditional one-BHK remain at 1.5-3 per cent. Co-living further enhances revenue potential as cost of shared spaces such as kitchen and living rooms is amortised over a greater number of bedrooms than in a traditional residential development.

Baijal further added, ?The survey conducted by Knight Frank India shows great potential for rental housing in the country. As more and more organised players enter co-living spaces, these are likely to attract institutional funding, assuring better yields to development and operating companies. This will therefore allow funds over time to further diversify their rental yield generating asset portfolios in India beyond office space and retail malls.? 

Read the full report here.