CO-LIVING, THE NEXT BIG THING IN REAL ESTATE

Human beings are hardwired to live and thrive in closed knit communities. We see it in our familial patterns, our social circle and, in the way we've chosen to live since time immemorial. The concept of living in communes, with your neighbours just a mere call away dates to the time humankind began socialising. Through every century, as the political and anthropological face of humans changed, community living has evolved too. What started as basic hutments and communes, slowly turned into far more sophisticated setups like co-housing settlements. Created from the same social fabric, the idea of co-living is beginning to gain momentum. Its predecessors like Paying Guest Apartments, Shared Student Housing and even Co-Op housing have all pitched in, honing the rough edges of co-living, making it a viable option for the young Millennials, whose needs are more fluid and their patience thinner.

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But more importantly, let's also ask ourselves this - can the co-living sphere also double as a viable investment option? Is this millennial hot pick an emerging new asset class that will serve both the digital nomads and the real estate stakeholders? While, some are sceptical of what it might do to potential homebuyers - having ready-made homes at their disposal without burning a hole in their pockets, some think this is the revival the sector needs.

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CO-LIVING - OLD WINE IN A NEW BOTTLE?

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The common question that seems to follow co-living is, what is it? and how is it different from what we were already doing? To many, it might seem like rehashing the age-old concept of living together to skrimp on expenses, by sharing the living costs, with a bonus of friendly neighbours. While in some parts, that might be true, co-living is more than just slumming it out together. Co-living is an idea that satiates the youths' need to have homes that fulfil them, without burning a hole in their pockets. Gone are the days when young professionals, students, or fresh graduates were forced to live in cramped houses, for the lack of funds and space. Co-living lets them live their full lives, within their financial budget.

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Birthed and honed ever since, co-living is an offspring of co-housing. Co-housing, as we know it first began in the late 1960s, in Denmark, where a community of people lived in individual home units in a building, while sharing common spaces like an entertainment area, a living room or sometimes even the kitchen. While culturally and politically, they stemmed from socialism, it made the matter of affordable housing realistic and accessible. Co-living spaces function similarly. However, there have been remarkable additions to the setup that helps elevate it to make it the ultimate definition of modern housing.

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Co-Living spaces today are homes managed by a company or real estate players, eliminating all contact between the tenant and the landlord. Residents have their own furnished private living quarters and bathrooms (typically) but share common spaces like living, cooking and recreational areas. Based on the idea of a shared economy, all common expenses are split evenly amongst the residents. The rent a resident pay becomes more economical, without having to compromise on the quality of living or space. Co-living spaces are mostly directed towards young professionals and millennials who yearn for a full life, without having to compromise on their standards of living despite their limited budget. Given the fast-paced and dynamic nature of the job market too, professionals are shy of making a huge real estate commitment - be it signing an 11-month rental lease or buying a home. Co-living spaces pose as the perfect crash pad for such employees, who may have to shift cities, at a moment's notice.

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This is a generation that refuses to compromise on style, and comfort, be whatever the situation. Simply making do, is no longer an option. For a generation that is full of energy, innovation and zeal, co-living spaces would not only be complementary, but it would also be ideal.

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Here are some notable departures from the usual paying guest system that a co-living space offers a resident and amplifies their living experience.

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1.????????????Unlike PGs or even rental apartments, Co-living spaces don't tie down residents with a rigid lock-in period, before which they can't move out, should they choose to.

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2.????????????Similarly, co-living spaces also don't demand a high-security deposit off residents, making them a popular option within young professionals and fresh graduates.

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3.????????????Co-living spaces offer fully furnished rooms, with more than just the basic amenities. Most PGs are known to provide scant furnishings, and rental apartments often don't come with anything at all.

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4.????????????In most Co-living spaces, residents don't have to shell out extra cash for utility bills like electricity, or cable, on top of their rent. Or in other cases, the expense is built into their rent, so no additional money must be paid, saving extra expenses during the month. Often, this is not the case in a PG or a rented apartment.

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5.????????????Many PGs don't offer food or packed food services. Residents are then left scouring for an additional service. Co-living spaces offer food, in either a mess type setup or offer packed food. Unlike Co-living spaces, PGs also have restrictions on cooking food inside.

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6.????????????In a co-living space, residents are free from the constant supervision of their landlord or warder. If they don't inflict any damage to the property or cause any harm to their fellow residents, residents are free to do what they please.

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7.????????????Similarly, there are no restrictions placed on residents, in co-living spaces. PGs often make banal dictations on when residents should be inside the house or when lights must go off, and who can visit the residents.

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8.????????????One of the biggest salient features of co-living space is their lack of compromise on safety and security. Starting from biometric entry systems to 24*7 security on the ground, co-living spaces are particular about their residents' safety. This puts residents' and their families' minds at ease.

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9.????????????In a PG or a rental apartment, a lot of amenities - both basic, and luxurious, might not be available. In a co-living space, residents have access to uninterrupted WiFi, television, a range of electronic gadgets and recreational options, amongst other things.

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10.????????Most importantly, co-living spaces strike the right balance between community living and privacy, affording the residents a choice between spending time alone in total silence or with their other mates, in the common area. Most PGs and Rented Apartments can't boast of the same, owing to the number of people residing in one flat, or because of the lack of space.

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The Co-Living industry in India is less than 5 years old, and yet economic experts predict its long and healthy performance. Several Co-Living companies and startups have now mushroomed across major metro cities and educational hubs across the country, including Mumbai, New Delhi, Bengaluru and Pune. Interestingly, tier-two cities aren't entirely left out of the equation either, with setups like 'Home for Artists' coming up in Jaipur and Udaipur.

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BUSINESS MODEL

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1.????????????Lease and operation?— a third party acts as an operator of the co-living service provided to the renters. In this model, the operator does not have any real estate ownership and takes the properties on lease from property owners before subleasing them to renters. There will be a revenue-sharing arrangement with the property owners based on who invests in the redesign and furnishing the co-living space.

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Co-living operators typically take properties on long-term lease from property owners, bear the makeover costs, load the properties with amenities, and invest in creating a tech platform for residents. They make money by charging on per bed basis from renters and for managing the premises.

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2.????????????Full ownership and management of operations?— property owners convert, reposition, and manage their existing properties as co-living spaces. In this model, no third-party operators are involved for?operations, and owners pocket all the profits which are plowed back into the management of property and expansion of operations.

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3.????????????Management fee - The owner hires an operator with extensive knowledge of the industry to manage the coworking/coliving operations. The hired operator receives a?management fee as compensation. The entire business (asset + coworking/coliving operations) belongs to the owner. The owner has no control over the business. The entire construction investment is made by the owner. The risk is assumed by the owner.

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STARTUPS CASHING IN ON THE MILLENNIAL DILEMMA

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According to the experts' forecast, the co-living sector is expected to rise at a commendable compound annual growth rate (CAGR) of about 17%, in the next five years. The start-up culture has found a conducive and nourishing home, here in India and the phenomenon of co-living has taken the start-up clique by storm, with several big operators emerging over the last few years. Currently, the sector is roughly evaluated to value about $120 million, which indicates a healthy cash inflow. Finance gurus expect the sector to touch the $2 billion mark by 2022, which shows a remarkable markup, with a span of just two years. The predicted growth chart banks on the growing demand from the sector's biggest target audience, and the increase in the number of players in the sector who are catering these demands as well. While the sector is brimming over with potential, there are about just 10 key players in the current market. The list includes CoHo, CoLive, Zolo Stays, Oyo Life, Stay Abode, Square Plums, Stanza and SimplyGuest to name some. Most of these operators came into being within the time frame of 2015 to 2018, with some starting fresh, while others branching out from parent companies like Oyo or Nestaway.