GenZ, millennials shift towards co-living spaces; players plan expansions

Bengaluru is witnessing a notable shift among Gen Z and millennials, particularly those aged 21 to 27 years, towards co-living accommodations. This trend is driven by a demand for flexible, affordable stays that offer enhanced safety and premium amenities, moving away from traditional paying guest (PG) options. The surge has been accelerated by the closure of 200 to 300 PGs in the city due to stricter Bruhat Bengaluru Mahanagara Palike (BBMP) regulations, alongside recent layoffs in the IT sector, prompting entry-level professionals to favour co-living spaces. Co-living facilities provide a structured, all-inclusive living experience with fully furnished, ready-to-move-in spaces at competitive rentals, often offsetting the perceived lower costs of traditional PGs. Providers like Nestaway and HelloWorld, which currently offer 1,000 beds, plan to double their capacity over the next two years to meet this rising demand.

Co-living accommodations are distinguished by a comprehensive array of amenities, including Wi-Fi, housekeeping, dedicated co-working areas, kitchen facilities, laundry rooms, recreational zones, and 24/7 security. Rents typically encompass access to shared amenities, utilities, and basic furnishings, making the overall cost of accommodation generally lower than comparable apartment rentals. Flexible stay durations and minimal upfront costs further enhance their appeal. Most co-living operators maintain high average occupancy rates of 85-90%. Monthly rents for these spaces typically range from Rs. 10,000 to Rs. 35,000 (US$ 115.89- 405.61), depending on the accommodation type. Specific micro-markets in Bengaluru, such as Thanisandra and Mahadevapura, are experiencing significant traction. According to a May report by Colliers, India's co-living sector is projected to reach one million beds by 2030, with market penetration expected to rise from 5% in 2025 to over 10% by 2030, potentially growing into a Rs. 20,000 crore (US$ 2.32 billion) market. This indicates a broader national shift from traditional PGs to professionally-managed co-living spaces, driven by a young, digitally-native workforce seeking more than just accommodation, including community and networking opportunities.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.