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Co-living segment gains traction in India; inventory to reach ~1 million beds by 2030
Co-living segment gains traction in India; inventory to reach ~1 million beds by 2030

May 14, 2025

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Co-living demand & stock estimated at 6.6 million & 0.3 million beds respectively in 2025. Penetration to improve significantly, from 5% in 2025 to over 10% by 2030.


India’s co-living market is on an upward growth trajectory, with demand rebounding strongly in recent years and operators gearing up for expansion across Tier I cities and select Tier II cities. Currently estimated at around 0.3 million beds in the organized market, the inventory is projected to grow more than threefold and reach close to a whopping 1 million beds by 2030. The resurgence of the sector is being fueled by rapid urbanization and migration to cities, especially amongst students and young professionals who continue to seek flexible, relatively affordable, community-driven, and hassle-free housing options.  

Co-living inventory, meanwhile, stands at around 0.3 million beds only, translating into a penetration rate of about 5%. Given the intrinsic nature of demand, leading operators are in an expansionary mode. As the co-living inventory is set to reach close to 1 million beds by 2030, penetration rates can significantly improve from 5% to over 10% by the end of the decade.

Trends in India’s co-living market

 

Co-living offers 20–35% rental arbitrage as compared to traditional rental accommodations
Typical co-living facilities provide fully furnished, ready-to-move-in spaces at rentals inclusive of utilities, maintenance, and amenities like Wi-Fi, housekeeping, and community events. This ensures convenience and cost-effectiveness for the target segment - young professionals and students. Co-living facilities also foster a sense of community through shared spaces and curated social interactions, reducing the feeling of isolation in urban environments. Additionally, flexible stay durations and minimal upfront costs make co-living a more amenable and hassle-free alternative to traditional rental accommodation.

Overall, co-living spaces offer a more affordable alternative across major Indian cities. As of April 2025, a comparison of rents between single-occupancy co-living facilities and traditional 1 BHK units indicates a rental arbitrage of up to 35%.

Citywise rental arbitrage: Co-living vs traditional rental accommodation


Capital deployment in the co-living sector bolstered by relatively higher returns 

Leading co-living operators in India are actively raising capital to scale up their operations, particularly in light of the growing demand from students and young professionals. Leading operators have collectively raised capital to the tune of USD 1 billion since inception (2015 onwards), underscoring investor confidence and long-term growth potential. Institutional investors too are increasingly viewing co-living as an attractive asset class, with returns closer to 10%, significantly higher than the 2-5% yield of traditional residential assets. In fact, steady rental income, asset-light model, and alignment with the lifestyle preferences of younger generations support diversification of capital deployment by institutional investors. As the co-living gets formalized to a greater degree in India, improving operator efficiencies and expansion are likely to accelerate the sector’s transition into a relatively matured real estate asset class in the upcoming years.

 

Lease-based model most preferred by top co-living operators
India’s co-living landscape is evolving rapidly, with distinct business models aimed at balancing scalability, capital efficiency, and service delivery. Broadly, the sector operates through three primary models: lease, management/revenue-sharing, and franchise: 

Regardless of the model, co-living operators aim to offer serviced living experience, typically via tech-enabled platforms that cover housekeeping, maintenance, laundry, and more. Typically, most services are bundled in a composite rent for the end-user, with food being billed separately.

Additionally, select co-living operators have ventured into Purpose-Built Student Accommodation (PBSA) by partnering with leading educational institutions. Although PBSA facilities, owned and managed directly by the operator, allow greater control over the asset, they involve substantial capital investment.

Demand-supply gap in student housing presents immense opportunities for investors and operators within the co-living sector

While co-living facilities are targeted at both students and migrant working professionals alike, student housing is more nuanced and is an important sub-segment within the co-living sector. Currently, approximately 11% of India’s population is in the 18-23 years age group. Although, enrollment in higher education remains low compared to developed countries and is indicated by a Gross Enrollment Ratio (GER) of 28.4% at the national level (2021-2022), enrollments in absolute terms remain huge. The number of students enrolled in higher education courses, including graduate and postgraduate programs, rose from 30.2 million in FY 2012-13 to 43.3 million in FY 2021-22, witnessing a CAGR of 3.7%.

A significant proportion of higher education students enrolled in India are out-station students who require accommodation facilities near their institutions. As per All India Survey on Higher Education (AISHE), during FY2021-22, accommodation facilities provided by colleges & universities could cater to approximately 4 million students, merely 35-40% of the demand and resulting in a significant demand-supply mismatch. As of 2025, the demand for student-living accommodation is estimated to be around 12 million. The acute demand and supply gap necessitates the need for quality, affordable accommodation, especially as more students migrate to cities for higher education. It also presents immense opportunities for student housing-focused operators to foray into the market with professionally managed, student-centric housing solutions that can alleviate supply-side constraints and support the evolving needs of India’s student population.


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Colliers India
Sukanya Dasgupta, Head Marketing and Communications - sukanya.dasgupta@colliers.com

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