Revival Story in 2021 amid of second wave of COVID-19
There were some positive signs in the Co-Living industry in India during early months of 2021 (January & February) which was extinguished by the resurgent Covid second wave in March 2021. It remained the same until September 2021. But from October 2021 onwards positivity and signs of revival is visible in the Co Living industry. Primarily encouraged by comparatively higher rates of vaccination among the corporate employees, companies have started requesting employees to Work from Office and education institutes have opened-up across country signalling the gradual re-emergence of Co Living sector from a long-forced slumber.
Dormant Co-Living facilities are also slowly being reactivated while the active ones are seeing better occupancies especially in the IT hubs of cities.
- Interest from Operators
- The primary indicator of revival is a positive interest from companies in co-living industry for business expansion. For the past 18 months, there was muted interest from the Co-Living companies regarding expansion opportunities even in the most premium of locations.
- Now, firms in co-living industry have also started evaluating greenfield projects which was on hold during COVID-19 period.
- Business Models
- In the last 18 months in-demand Co-Living locations could only muster revenue share, profit share proposals from the leading co-living companies instead of the pure rental model which was prevalent during the pre-COVID-19 period. Now many companies in co-living industry in India are proposing rental models, signalling Co Living companies’ renewed confidence in the business fundamentals.
- Security Deposit
- Pre COVID-19, the quantum of security deposit payable by operator to the property owner was in the range of 4-6 months depending on the location and the property attributes. During the COVID-19 period, the security deposit quantum dropped to 0-1 month. Signalling revival, now the companies are offering between 2 to 3 months as security deposit.
- Occupancy & Rentals
- The occupancy rates have reached around 60-80% of pre COVID-19 levels while the rentals (end user service charges) are hovering between 70% and 90% of pre COVID-19 levels thus signifying strong end user demand. While occupancy and service fees have improved, end users are still wary of committing to higher periods with most preferring to renew commitments monthly instead of the 3+ months commitment which was the norm in the past.
- VC funding for firms in Co-living industry in India
- The trend of VC investments for companies in co-living industry had been on a downturn since the pandemic has also showed a slow but steady reversal is a positive indicator. Investment in the Co-Living companies is the biggest vote of confidence in the sector.
- Renewed investor interest with leading Co-Living companies like Stanza Living and even relative upstarts like Settl being blessed by the burgeoning investor confidence in the sector. VC funds are also evaluating further investments in this sector.
The fundamental of the Co-Living sector in India continues to remain strong and any doubts on its sustainability can be put to rest. Community living with all services and comforts under a roof at a reasonable price is the need of the society, its here to stay and grow.
Read Meraqi’s Handbook for Co-Living Developments in India, A guide & application manual for design, development, investment, and operation. This handbook helps different stakeholders: developers, property owners, investors, operators, architects, and technical consultants to provide insights and 360-degree guide during development planning, investment decision, setting up and improving operations of Co-Living development projects in India.