India's co-living sector poised for massive growth; inventory set to triple by 2030

Time of India

08-05-2025

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India's co-living sector is witnessing a remarkable resurgence, fuelled by urban migration, shifting lifestyle preferences, and increasing demand for flexible, community-driven housing. According to industry estimates, the organized co-living inventory is projected to surge from approximately 0.3 million beds in 2025 to nearly 1 million beds by 2030 — a threefold increase over five years.This boom is driven by a growing young urban population, predominantly students and working professionals aged between 20 and 34, who are migrating to cities in pursuit of education and employment opportunities. The total demand for co-living beds is estimated at 6.6 million in 2025 and is expected to rise to over 9 million by 2030.The market penetration of co-living — currently at about 5% — is forecasted to double and exceed 10% by 2030. 'India's co-living sector is entering a new phase of growth, underpinned by strong demographic fundamentals and a growing preference for flexible, community-centric living,' said Badal Yagnik, CEO, Colliers India. 'The coming years will be crucial in shaping a structured, scalable, and investment-ready co-living ecosystem.'The co-living market, pegged at INR 40 billion in 2025, is expected to grow fivefold to INR 206 billion by 2030. Rising demand along with supply shortfall in student housing, are creating lucrative opportunities for developers, investors, and co-living operators.Currently, India's urban rental market is seeing a shift, as co-living offers better value, flexibility, and convenience compared to traditional rentals. Co-living rents, typically inclusive of utilities, maintenance, and amenities like Wi-Fi and housekeeping, present a rental arbitrage of 20–35% across major cities such as Bengaluru, Mumbai, Delhi NCR, and Hyderabad . For instance, in Bengaluru, average co-living single-occupancy rentals range from INR 11,700 to 23,700 per month, compared to INR 15,500 to 36,500 for traditional 1BHK units.The sector's evolution has also sparked strong investor interest. Co-living operators have raised over USD 1 billion since 2015, with institutional investors viewing the sector as a high-return asset class, offering yields of up to 10% — significantly higher than the 2-5% typical returns of conventional residential real estate. This capital influx is enabling operators to scale rapidly and improve service offerings.'Robust growth coupled with significant untapped potential presents the co-living sector as an increasingly attractive asset class within real estate contours in India,' said Vimal Nadar, National Director & Head of Research at Colliers India. 'The sector is now expanding beyond Tier I cities to Tier II markets like Indore, Jaipur, Coimbatore, Chandigarh, Visakhapatnam and Dehradun.'To meet growing demand, co-living operators are leveraging three key business models: the lease model (favored for its asset-light scalability), the management/revenue-sharing model (where operators share income with property owners), and the franchise model (enabling expansion via local partnerships). Most operators offer tech-enabled platforms bundling services like housekeeping, maintenance, and laundry, with food often billed separately.An emerging sub-segment within co-living is Purpose-Built Student Accommodation (PBSA), which addresses the unique needs of India's vast student population. Along with a Gross Enrollment Ratio (GER) of 28.4%, India had over 43 million students in higher education as of FY 2021-22, many of whom are outstation students requiring quality accommodation.Currently, the demand for student beds stands at around 12 million. However, colleges and universities can only cater to approximately 4 million students — around 35-40% of the demand. The remaining 60-65% face a lack of suitable living options in 2025. This stark mismatch highlights the pressing need for well-managed, affordable student-centric housing.Operators are now partnering with educational institutions to set up PBSA facilities, which, although capital-intensive, offer greater operational control and long-term revenue streams. This shift is expected to play a pivotal role in bridging the student housing gap while enhancing the maturity of the co-living segment.With strong fundamentals, rising investor confidence, and evolving consumer expectations, India's co-living sector is poised for a transformation. By 2030, the sector will not only triple its stock but also cement its position as a key component of the country's rental housing ecosystem.