Navigating the Scalability Challenge in India's Co-Living Market
As the co-living market in India grows, operators are exploring new business models to tackle the scalability challenge. From asset ownership to franchise models, these strategies aim to increase profit margins and expand their reach.
ColivingScalabilityBusiness ModelsAsset OwnershipRevenue SharingReal Estate NewsAug 01, 2025
According to a 2025 Colliers report, the organised co-living segment in India, which currently has an estimated inventory of about 0.3 million beds, is projected to reach close to 1 million beds by 2030. Amidst the ambitious projections, co-living operators are now facing a fundamental issue in the segment, achieving scalability. As explained to FE by Mayank Pokharna, Founder of Everything Coliving, the current leasing model adopted by most operators in the country is proving to be a major hurdle for scalability.
Pokharna, who provides a one-stop-shop advisory platform for players in the segment, stated, “Most operators follow a master leasing model, wherein the tenant leases an entire property from the owner and subleases parts of said property to other tenants. Usually, 55-60% of the revenue generated goes to the landlord. Remove all the added costs, and the operator is left with a profit margin of just about 15-20%. So, while there are profits, growing beyond a certain point is difficult.”
Similar sentiments are echoed by Jaikishan Challa, Chief Executive Officer (CEO) of housing solutions company, Curated Living Solutions (CLS), who says, “This is a high volume, low-margin business. Despite minimal entry barriers in the sector, only 5-10% of the organised sector has been captured by collective co-living operators. The rest of the market falls under the unorganised sector, in which PGs and unregulated accommodations operate. To break out of the 20-25% profit barrier, owning assets is necessary.”
While most co-living operators utilise the leasing model for their business, several have begun adopting different business models to balance scalability and increase capital efficiency.
CLS, for instance, is gradually building its own assets to achieve a higher profit margin in the future. Of the 30 properties it has across 10 cities, 4 are its own. “In the past 5 years, we scaled to 12,500 beds,” shares Challa. “In the next 3 years, we aim to establish 25,000 to 30,000 beds across India – of which 50% will be owned by us.”
About 40% of CLS’s beds are for its co-living spaces, while the remaining 60% are allocated for its student housing arm. While Challa admits that building assets is capital intensive, he predicts higher returns in the future. “In a leased property, the operator is likely to pay a capital expenditure of Rs 1 lakh per bed, which includes the deposit cost, furniture and additional working capital. In an asset-heavy property like CLS, the cost ranges from Rs 8-10 lakh, which covers land costs, building costs and furnishings. However, bank funding reduces the financial load, and in the future, an owned property will give me 50-60% EBITDA,” he states.
Another emerging model highlighted by the Colliers report is the revenue-sharing model, which has been adopted by Tribe Stays. This model, which allows the operator and developer to share a certain amount of the revenue, has boded well for the luxury co-living operator, according to co-founders Aman and Shantam Mehra. “It is often difficult to scale while paying fixed rent for spaces, especially if there is a low occupancy rate,” says Aman. “The revenue share model is aiding our expansion plan, wherein we aim to establish 4,000 beds in the next 12 months and 25,000 beds within the coming 4-5 years.”
Although there isn’t specific data on the demand for premium co-living spaces in India, the Mehras maintain that there is a major demand for premium co-living and student accommodation. “We have one of the highest price points per bed, ranging from a monthly Rs 60,000-70,000 per bed in Bombay to Rs 20,000 in Indore. Yet, we see an 85-95% occupancy rate,” Aman says. Tribe Stays, which is currently seeking funding in an undisclosed round, aims to expand across metros such as Bombay, Bangalore, Ahmedabad and Hyderabad.
Another popular model that is being adopted by co-living operators is the franchise model, through which operators allow property owners to use their brand and access expertise and resources for franchise fees. For FF21, founded by Ajay Nemani, this model is the new addition to its revenue-share and leasing model, which account for 30% and 70% of its operations, respectively.
He maintains the FF21’s profitability margin will rise exponentially once several properties adopt its franchise model. “We are currently in talks with over 20 property owners who want to join the organised co-living sector. Through this model, we aim to establish 2,000 beds within a year and a half. We provide the property with services including branding, staff training, software integration and management. While our top line may come down, profitability margins will go up to 85-90%,” he estimated.
FF21 is currently focused on expanding across Bangalore, as Nemani explains, “We are only operating in Bangalore at present as the market is growing fast within the city. Since we are bootstrapped, our focus is on curated buildings, not rapid expansion.”
Frequently Asked Questions
What is the main challenge facing co-living operators in India?
The main challenge is achieving scalability due to the high costs and low profit margins associated with the current leasing model.
What is the projected growth of the co-living market in India by 2030?
The organised co-living segment in India is projected to reach close to 1 million beds by 2030.
What is the revenue-sharing model in co-living?
The revenue-sharing model allows co-living operators and developers to share a certain amount of the revenue, which helps in reducing financial burdens and aiding expansion.
How does asset ownership benefit co-living operators?
Asset ownership can lead to higher profit margins and greater control over the business, although it is more capital-intensive initially.
What is the franchise model in co-living?
The franchise model allows property owners to use a co-living brand and access its resources for a fee, helping operators expand their reach and increase profitability.
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