India’s first-ever generation to have access to computers and smartphones, quality education, who flip between websites, apps, and social media feeds, and lead an elevated lifestyle, is transforming real estate offerings. Born between 1997 and 2012, Generation Z is reimagining housing beyond the pure-play aspects of location, affordability, and connectivity. Instead, they are increasingly opting for greater comfort, enhanced services, and a digital-first experience. This shift is primarily led by growing disposable incomes, a social media-driven lifestyle, and complete freedom provided in comparison to traditional paying guest models. These factors are leading to the rise of student and co-living services offering fully furnished housing, housekeeping services, and on-tap support systems.
Identifying the immense potential in this segment, an increasing number of student housing operators are partnering with developers and local landlords to either transform their existing properties or develop new ones to cater to the taste palette of the younger generation.
According to global property consultant Colliers, India’s student housing market is expected to grow significantly, reaching approximately ₹6,822 crore ($780.5 million) by 2030, with a compound annual growth rate (CAGR) of 6.6% from 2025 onward. As of 2021-22, student enrollment in higher education stood at 43.3 million, with over 75% of students living away from their hometowns. However, on-campus hostels can accommodate only 20% of the total student population, creating a gap in housing. This has increased reliance on off-campus accommodations, with private operators offering security, food, Wi-Fi, and transportation services.
Upward growth trajectory
Similarly, 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, as per the Indian Brand Equity Federation. Currently estimated at around 0.3 million beds in the organised 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 urbanisation and migration to cities, especially amongst students and young professionals who continue to seek flexible, relatively affordable, community-driven, and hassle-free housing options.
The rise in the demand for premium living solutions for today’s youngsters is leading to further segmentation of the Indian residential real estate market and opening up billion-dollar opportunities while bringing greater comfort and convenience to the end users. This assumes significance considering individuals are moving away from PGs, which are typically managed by individuals or small businesses and possess basic amenities, while co-living spaces are more professionally managed and offer a wider range of amenities with a strong focus on community building.
Through a wide range of partnerships with solutions providers such as high-end and comfortable furniture suppliers, high-speed Wi-Fi, trained housekeeping staff from staffing agencies, and timely maintenance, youngsters are increasingly opting for services from the organised industry. This, apart from organising events, accurately and proactively dispensing information about developments at the property while building a friendly environment, is attracting Gen Z towards student and community living.
Good, better and best
Although there is significant traction in the student and co-living segment, operators are able to cater to customers across all price segments. From value to mid-premium and luxury housing offerings, operators are ensuring standardised offerings which are still higher as compared to traditional PG setups and are building on impressive aesthetics and services similar to high-end service apartments and hotels. This, complemented with the accelerated adoption of proptech platforms and most operators making it easy to discover and book a bed online, is further making it easier for youngsters to avail these services.
Interestingly, the sector is also witnessing impressive traction from developers and institutional investors, attracted by exciting returns. According to Tracxn, the co-living real estate comprises 810 companies, including 230 funded companies that have collectively raised $4.87B in venture capital money and private equity. Out of these, 76 are Series A+ funded, and one has achieved unicorn status.
Colliers suggests that the student housing sector presents attractive rental yields, ranging from 8% to 18% per annum, much higher than traditional real estate. Despite challenges such as financing issues and a lack of organised players, experts believe private equity investments will drive growth in this market. However, it’s important for the government to build conducive policies around the student and co-living segment through tax incentives for developers, along with public-private partnerships to expand the sector.
As we look forward to the next phase of growth of the student and co-living segments, we expect mushrooming of operators and properties across the top metros before trickling down to smaller cities, which are also witnessing shoots of green in student migration. Therefore, it becomes important to build regulations, standardise services, and build ecosystem partnerships to drive awareness and improve the quality of services.
The writer is CMD, BCD Group.
Published – August 01, 2025 04:45 pm IST