Post 2016 investors are shying away from investing in residential real estate. The primary reasons include slow sales, poor appreciation, uncertainty on delivery and management of post investment. However, the rise of Coliving segment is providing a good opportunity to the investors who were keen to invest in residential segments before.
Why to invest in coliving?
a. Varied Ticket Sizes: In purpose built Coliving projects developers offers varied ticket size of investment. It can start from INR 25L onwards.
b. Assured Rental Income: As an investor in Coliving project one received assured rentals on a monthly basis from rental housing firm. Annual yield for purpose built project varies between 8% - 10%. It is comparable to commercial assets. Annual appreciation is expected to be in range of 3% - 5%.
c. Long Lease Tenures: The rental housing firms takes these projects on a long lease basis – 30 years. Therefore, loss on account of vacancy is low compared to typical commercial assets.
d. REIT Compliant Properties: These projects will be listed under REIT in future as well. So, management of these assets would be in good condition.
e. Location: Most of these assets are located in close proximity of matured economic hubs. Therefore, valuation of these assets will appreciate at brisk rate.
f. No hassle of post investment management: This investment does pose any post investment challenge as in other real estate investments.
g. Availability of good rental housing firms: Good rental housing firms have entered in this field with good investments/ funds backing the same. So, stability of this segment has improved multifold.
h. Market Size: Coliving is growing at brisk rate across Tier 1 cities and it is expected to remain so in coming years as well. Occupancy rates in Coliving properties is 90% + and in many good properties it is at 100%. It shows the market need of this segment and it is likely to remain strong in coming years as well.
Therefore, Coliving is a great opportunity in real estate segment. It provides opportunity to different scale of investments.