Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs.
The real estate is experiencing different demands coming from the millennial, who are more interested in temporary engagement rather than permanent investments towards their working space and living space as well.
Real estate sector in India is expected to reach a market size of US$ US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent of the country’s GDP by 2025. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs.
Commercial office stock in India is expected to cross 600 million square feet by 2018 end while office space leasing in the top eight cities is expected to cross 100 million square feet during 2018-20. Grade-A office space absorption is expected to cross 700 million square feet by 2022, with Delhi-NCR contributing the most to this demand.
It all started with sharing space in cabs and now it has reached sharing spaces in daily life. Co-living and co-working spaces are gaining popularity among the millennial because they believe in staying free and working according to will.
According to Anuj Puri, Chairman, Anarock Property consultants, “One of the offshoots of this evolutionary process is the rise of workplaces that can be easily accessed anytime and from anywhere - a plug-and-play concept of office spaces.”
He adds, “Buoyed by the Central Government’s efforts to create a viable eco-system for young entrepreneurs, India is witnessing the mushrooming of multiple start-ups and SMEs across the country. Such businesses are increasingly focusing on co-working spaces.”
What makes co-working spaces a profitable segment?
In the current scenario, this segment is expected to grow at an annual rate of almost 30-40%. There certainly exists an immense opportunity for multiple players to leverage the growth of co-working spaces in India.
Co-living spaces gaining popularity
Co-living spaces and rentals have taken the real estate business to different spheres altogether. While it is largely the major cities like Bengaluru, Mumbai, Gurgaon and Pune that began promoting this concept, the demand for co-living spaces is also gradually percolating into tier 2 cities like Jaipur and Lucknow where both working millennials and students are increasingly opting for co-living spaces.
As per IMF’s last estimate two years ago, India’s residential rental market was estimated to be a more than US $20 billion market comprising of $13.5 billion in urban areas, $0.8 billion in rural areas, and $5.7 billion of vacant properties held by non-resident Indians living abroad.
Puri says, “While informal co-living has always existed, start-ups such as Oyo Living, Nestaway, CoHo Living, etc. bring a more professional and organized way of catering to the accommodation needs of new-age millennials. In fact, a slew of start-ups is now betting big on this new way of living, heavily backed by investors such as Goldman Sachs, Sequoia Capital, etc.”