Co-working and co-living now under one umbrella

In today's competitive world, there isn't much of a choice before start-ups to choose one over the other. It's co-working and co-living that we are talking here. Concepts hitherto independent of each other with a plethora of start-ups buzzing in each, co-working and co-living are today intertwined with experts stating that for a start-up to truly mature and grow, it needs a presence in both. In short, a co-living start-up needs to consider making a natural progression into co-working and vice versa with co-working start-ups who need to think about expanding their offerings into co-living.

"It is about how cleverly a start-up can outsmart the competition by offering a complete gamut of facilities and services to the working millennial. People today who work out of co-working spaces are mostly migrants into a city and, therefore, are on the lookout for shared living spaces that take care of basic utilities and housekeeping at optimal prices. Thus if a start-up is offering both co-living and co-working under the same umbrella brand, it stands to gain over competitors that function into either one of these segments," say experts.

The market potential for shared living and workspaces is tremendous. As per estimates by RedSeer Consulting, at present, the co-living space in India is worth $12 billion. Co-working, on the other hand, as per a JLL India report, is growing at a rapid pace of 40-50%, with over 13.5 million individuals expected to work out of shared spaces by 2020.

Sensing the potential, Embassy Group, which ventured into co-working spaces through WeWork India, has now announced plans to build co-living facilities with 20,000 beds and aims to grow the number to over 100,000 beds in the next five years. WeWork India meanwhile has 23 co-working centres comprising about 40,000 seats across Bengaluru, Mumbai, and NCR.

Says Pankaj Karna, founder and managing director, Maple Capital Advisors, "We could see hospitality players exploring co-living more aggressively, while in some cases, we could see co-working players providing the same and possibly co-living players offering co-working as well."

Co-living start-ups charge upwards of Rs 8, 000 per individual per month (subject to location), while in co-working, the per individual costs are similar. "So if a venture is able to offer both shared working and living spaces, it can earn more than double from the same individual. This is a smart business move," say experts.

According to Rohit Kapoor, CEO, New Real Estate Businesses, OYO, the brand's presence in both the co-working and the co-living spaces is a bold step towards OYO realising its vision of becoming a global real estate brand while continuing its dominance in the hospitality industry. Since its launch in October 2018, OYO LIFE, which provides shared living spaces, has over 25,000 beds with over 3,000 new beds being added each month. ''OYO LIFE is currently witnessing nearly 85-90% occupancy. Overall, we have set an ambitious target of 1,00,000 beds in India by the end of 2019 and are expanding our base to more cities. There is an untapped demand of 60 million beds in India currently and this creates a huge opportunity for companies and start-ups operating in the space,'' says Kapoor. OYO Workspaces, meanwhile, has over 22 workspaces, with 15,000 seats across India and aims to expand to over 50 centres by the end of 2019.

The shared living and working sector has been buzzing with acquisitions and fundraises off late. Rental property start-up NestAway Technologies announced recently its entry into the co-living segment and has plans to invest $10 million to reach 50,000 beds. Co-living start-up Grexter Living recently acquired i2Stay, a budget accommodation provider and took its total bed count to over 5,000 beds in Bengaluru post the deal. Earlier in the year, Grexter had raised $1.5 million from Venture Catalysts and is now looking to expand into markets like Pune and Hyderabad. OYO, meanwhile, acquired co-working start-up Innov8 for $31.84 million this March. Awfis, another co-working start-up, which has over 30,000 seats across multiple centres, raised $30 million in a round led by marquee investor ChrysCapital and others. According to Amit Ramani, founder & CEO of Awfis, the additional capital raised will support the venture in expanding their footprint in India with 400+ centres and 2,00,000 seats over the next 36 months.

According to Karna, as against co-working, where existing office spaces are being converted to co-working spaces, in co-living, existing residences are often not designed for the co-living purpose. "We believe buildings designed for co-living will evolve and emerge rapidly in the next 24 months. This is also driven by the fact that the developers are able to get near commercial yields from residential assets through various engagement models with co-living players." Karna feels that start-ups can draw in synergies to create co-living or co-working spaces. "There are synergies from design, customers and services for co-working players to offer co-living," adds Karna.