New Delhi,13th September 2023– The demand for PG accommodations in India is on the rise, driven by a confluence of factors, including the presence of educational institutions, business hubs, and urban job opportunities. According to “Exploring the current landscape of PG accommodation in India”, a flagship report by Magicbricks, in the fiscal year 2022-23, NCR represented 24% of the total demand for accommodation and 25% of the total supply, and Bengaluru closely followed, contributing to 23% of the demand and 17% of the supply. In the Mumbai Metropolitan Region, the demand and supply for PG accommodation accounted for 16% each.
The report further observed that 68.5% of tenants across India expressed interest in double and triple sharing PGs while approximately 71% of PG listings on the Magicbricks platform featured double occupancy or larger setups. Monthly rents for triple-sharing accommodation is INR 4,800-7,700, double-sharing accommodations charge INR 6,800-10,000 per month and rents for single occupancy PG rooms are between INR 6,800-15,200 per month. Further, approximately 55% of the demand was for PGs catering to both men and women.
According to Sudhir Pai, CEO, Magicbricks “The demand for PG accommodations in India is intricately tied to the rapid urbanization and the pursuit of better education and career opportunities. Cities with a high concentration of students and working professionals have witnessed a surge in the PG market. At the same time, with 52% of India’s total population being millennials, the demand for affordable and convenient accommodations such as PGs is expected to continue its momentum in the medium to long term. Another key driver of the growing popularity of PG accommodations is their cost-effectiveness. Rising rents in major cities have led tenants to seek alternatives, and PGs offer a more affordable option.”
For real estate investors, PG accommodations are becoming lucrative as the rental yields have far outstripped those in the conventional housing market. While rental returns have remained stagnant at 2-3% within the conventional housing market, paying guest accommodations offer 50% – 75% more yields, accompanied by comparably lower risks.
The report concluded that while demand and supply for PG accommodations generally aligned in most cities, there were deviations in some regions. For instance, Greater Noida faced a shortage of single occupancy PGs by 11.6%, while demand for double occupancy PGs exceeded supply by 10.4%. Cities like Thane and Kolkata experienced a demand for triple sharing PGs that was 7-9% higher than the available supply.