The driving force behind co-living is the young workforce and students who typically travel to metropolitan cities for studies, internships or jobs. Student housing and cohabitation have grown in importance in recent years as Generation Y&Z implemented concepts of shared economy and commerce. He gave prominence to several coliving operators like Zolo Stays, OYO Life, NestAway, Hoolive, Stanza Living, Olive Living and many others. However, the concept of a “shared economy” has been put to the test in the era of the pandemic. Homework and hybrid work, which has become commonplace, has had an impact on the occupancy of workplaces and cohabitation facilities.
Uncertain economic conditions, job losses, homework and migrants returning to their respective hometowns following the Covid-19 epidemic have crippled the nascent cohabitation sector. Migration to urban areas is the main driver of demand for cohabitation spaces. India experienced around 35-40 million square feet of Class A office absorption each year through 2019. However, in 2020, net absorption fell 10-15%, which is expected to remain low. in 2021. The unemployment rate also reached 11.3%. during this period.
In addition, homework has increased tenfold for the existing workforce, resulting in fewer takers for cohabitation spaces. The situation improved between December 2020 and March 2021, when the occupancy rate was restored to around 45-50% in most co-living facilities. However, soon the second wave put a damper from the second quarter.
As it stands in the fourth quarter of 2021, the industry looks much more optimistic than before. The main factor is the vaccination which is about to hit the 100 cr mark. The unemployment rate is down to 6.8% from the previous high. Hiring by IT companies accelerated, followed by strong industry performance. And what’s more, most organizations are recalling their employees to the office.
On the student housing side, campuses should buzz again for odd semesters. Colliers surveyed 150 private institutes across the country. She revealed that there are more than 200,000 migrant students on these campuses, while only 60 to 70% of students are currently housed in hostels. Thus, creating an untapped market of 60 to 70,000 potential beds.
Student housing and co-living offer cost-effective solutions for young migrants who otherwise face many challenges in a metropolitan city in finding accommodation with a housing company. There are safety and security issues apart from various nuisance values created from cultural differences. The sector will gain strength and dynamism as the office occupancy rate peaks by 2022.
Co-Living has long term potential in metropolitan cities. However, now is the time for market consolidation. While many players who could not support the assault of the previous year left the company, others took the opportunity to strengthen their position through strategic acquisitions and expansions. The industry will also experience increasing adoption of technology, innovative pricing and a better stay experience. As each challenge also brings opportunities, the industry will experience a turnaround and transformation in the times to come.
(By Subhankar Mitra, Managing Director, Advisory Services (India), Colliers)