Alternate Real Estate Categories With Higher Rental Yields

Even as the primary real estate sector has been going through a crisis, changing demographics, proliferating entrepreneurship, digitisation, and millennial demand have led to boosting the demand for various alternate real estate categories like co-living, co-working, and student housing. According to the  'Emerging Asset Classes: The Future Looks Promising' report by Confederation of Indian Industry and Anarock Property Consultants, a significantly higher rental yield from such properties have led to major investor interest in this segment.

According to their findings, co-living, co-working, and student housing have 7-11 per cent higher rental yield than 3 per cent national residential average.

Anuj Puri, Chairman, Anarock Group, said, while co-working has evolved from traditional office real estate, co-living, student housing, and senior living are the next evolutionary steps in the residential real estate domain.

“The drivers behind this evolution are changing social dynamics, a highly enabled start-up environment, rising interest in higher education by migratory student population, and the need for quality housing solutions for senior citizens," he said.

The report delves into these highly promising new Indian real estate asset classes and explores their growth drivers as well as the underlying opportunities for investors and other real estate stakeholders.

"Co-living, student housing, and senior living are fundamentally innovative and specialised residential assets, but with varied business models," said Puri.

The report highlights that a majority of millennials today prefer co-living over traditional rental models. The top six players alone now have 1.18 lakh beds and are drawing investments from both domestic and global institutions. From seed funding to subsequent rounds of financing, private equity players, developers and individual investors have backed this segment.

“While co-working as a segment has flourished in India, there are interesting differences in how local and global players address it. As of today, domestic co-working operators have restricted their presence to tier-I cities, while global players are also penetrating into tier-2 and tier-3 cities,” Puri explained.