Real estate consultancy Knight Frank, in a report, said that the current demand for Purpose Built Student Accommodation (PBSA) totals more than eight million bed spaces in India. This could grow to 13 million beds by 2025. Around $100 million was invested into the Indian PBSA market in 2018. Not just student accommodation, even the market for working professionals is rising. This world, in non-technical terms, is better known as co-living. The market is about two years old in India and is developing interesting nuances.
Business Today recently spoke to Deepak Anand, Founder and CEO of Housr, a company that is planning a 'mega communities model' or where every property will have about 500 residents. The start-up, founded by Anand and Kalpesh Mehta (Founder and Managing Partner, Tribeca Developers) has received investments at $30million pre-money valuation. Here's what Anand shared:
- 1) The co-living industry, when it started two years ago, was essentially a paying guest (PG) plus model. Companies aggregated 20-30 bed properties that provided furnished accommodation but little else. The focus now has shifted to services, much like what co-working companies provide.
- 2) Housr's idea of aggregated co-living is a focus on the community. Get millennials together, improve the way they live, keep them engaged over the weekend, tie up with partners across categories such as food, retail, fashion, mobility or whatever is part of the daily life routine of a millennial.
- 3) The company is leasing full residential towers, studio apartments, serviced apartments from developers on nine-year lease with a lock-in on the developer. Housr would then furnish the tower creating a lounge area, a gym, a dining area etc., besides integrating security features such as biometric access. It has, thus far, aggregated 10,000 beds across Delhi, Gurgaon, Noida, Greater Noida, Kota, and Mumbai. Anand says his company is also working with developers for 'built-to-suit' - make a tower exclusively for co-living.
- 4) The strategy of leasing complete towers and built-to-suit makes sense from an efficiency perspective. In purpose-built inventory, the efficiencies go up since there is no kitchen - many co-living companies have only central dining and residents are allowed only re-heating of food, besides refrigeration. While apartments meant for family usage could have rooms 600 sq ft large, a studio could only be 300-350 sq ft. The yield per square feet, therefore, is higher for the co-living investor. On the other hand, leasing the whole building brings in efficiencies of scale. "Any costs that you incur providing amenities are more efficient. The efficiencies of scale do not trigger unless you have upwards of 300-400 residents living together. Even if there are 30 people, you need four security guards. You need the same number of security guards for 300 residents," Anand said.