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Developers have an opportunity to build houses specifically for co-living spaces
Live Mint  |  April 4, 2019

Sharad Mittal
  • India has warmed up to the idea of co-working spaces, which have attracted significant investment in the past few years
  • An opportunity exists for developers to build apartments/houses for co-living spaces keeping in mind a highly migrating population

 

India has warmed up to the idea of co-working spaces, which have attracted significant investment in the past few years. One of the reasons for its success lies in the value created for all stakeholders.

 

Developers: Large space being taken up by co-working players and initial investment through the build to suit and forward sale routes have made developing and leasing properties for co-working spaces attractive.

 

Co-working players: With economies of scale, they are able to create additional value from a given space by providing more than just an office to occupiers.

 

Occupiers: Flexible space for small and growing businesses has been one of the key reasons that co-working spaces have become attractive for many. Value added services such as tech-enabled offices, amenities such as internet, phones, printers, meeting rooms and house-keeping services have made setting up and working hassle free.

 

An opportunity exists for developers to build apartments/houses specifically for co-living spaces keeping in mind students/young working professionals and a highly migrating population.

 

Millennials would pay a premium for a community-based co-living model that not only allows flexibility to move across locations but also offers value-added services at the click of a button.

 

While there are intermediaries which offer these services, growth has been limited because of low yields in residential real estate, which makes the rental model unviable.

 

There is an opportunity in a development-based model wherein spaces are designed ground-up, based on requirements of a co-living space, where the success doesn’t lie entirely on the yield spread made through leasing and operating a co-living space, but more on creating a better value of the asset over time.

 

(Sharad Mittal is director and chief executive, Motilal Oswal Real Estate Fund.)