Coliving, Coworking & Student Housing Give 7-11% Higher Rental Yields– CII-ANAROCK Report

• Coliving, coworking and student housing have 7-11% higher rental yield than 3% national residential average
• Top 6 coliving players currently have 1.18 lakh beds priced between INR 6,000-30,000/month
• Domestic coworking operators currently present only in tier 1 cities, global players penetrating into tier 2 & 3 cities
• 13 prominent student housing brands now have 1.5 lakh beds across India
• Data Centres with potential of 10-14% rental yield drawing high investor interest; major players prefer Mumbai, Pune & Bengaluru
• Senior housing growth primarily in top cities’ outskirts & tier 2 & 3 cities like Bhiwadi (NCR), Neral (Mumbai), Talegaon (Pune), Devanahalli (Bengaluru), Mysuru & Coimbatore

Mumbai, 20 February 2020: Changing demographics, proliferating entrepreneurship, digitisation and millennial demand are boosting the demand for various alternate real estate categories. Their significantly higher rental yields attract major investor interest, according to the latest CII-ANAROCK report ‘Emerging Asset Classes: The Future Looks Promising‘ which was released by knowledge partners ANAROCK Property Consultants at the 2nd CII Real Estate Confluence in Mumbai today.

Anuj Puri, Chairman – 2^nd CII Real Estate Confluence & Chairman – ANAROCK Group said, “Coliving, student housing and coworking have rental yields of anywhere between 7-11% – a significant step-up from the 3% national average rental yield of traditional housing formats. Coliving, student housing and senior living are the next evolutionary step in the residential real estate domain, while coworking has evolved from traditional office real estate. The drivers behind this evolution are changing social dynamics, a highly enabled start-up environment, rising interest in higher education by migratory student population, and the need for quality housing solutions for senior citizens.”

The report delves into these highly promising new Indian real estate asset classes and explores their growth drivers as well as the underlying opportunities for investors and other real estate stakeholders.

“Coliving, student housing and senior living are fundamentally innovative and specialised residential assets, but with varied business models,” said Anuj Puri. “The report highlights that a majority of millennials today prefer coliving over traditional rental models. The top 6 players alone now have 1.18 lakh beds, and are drawing investments from both domestic and global institutions. From seed funding to subsequent rounds of financing, private equity players, developers and individual investors have backed this segment. Start-ups have particularly benefitted from the infusion of funds and are scaling up operations in multiple cities. Likewise, ANAROCK is actively tapping the considerable opportunities of alternate asset classes like coliving, student housing and K-12 schools.”

While coworking as a segment has flourished in India, there are interesting differences in how local and global players address it. As of today, domestic coworking operators have restricted their presence to tier I cities, while global players are also penetrating into tier 2 and 3 cities.

Meanwhile, the government’s efforts to make data localization mandatory will ensure a promising future for data centres in the country. The recent budget’s proposal to roll out a new policy for building data centre parks underscores the importance and relevance of this promising asset class. Currently, the major data centre companies prefer Mumbai, Pune and Bengaluru.

Other Report Highlights

• Senior living has immense potential in India largely because life expectancy here has improved to 68.8 years in 2018. Moreover, the population aged above 60 years has already breached the 100 million mark
• Apart from holistically dedicated senior citizen spaces, many developers are also launching integrated townships with a proportion of units dedicated to senior living. Most of these projects will thrive in tier 2 & 3 cities.
• Currently, for over 37 million students there are just over 6.54 million hostel beds which is merely a little over 17.4%.
• 451 million active internet users, 1,173.75 million mobile subscribers, the rapid rise in digital transactions, Smart Cities Mission and Personal Data Protection Bill will boost demand for data centres.