Will student housing be a future growth driver for real estate in India?

3 min read

Will student housing be a future growth driver for real estate in India?

Students collectively comprise a formidable target market for several industries and real estate is no exception. More and more young students are now switching gears towards pursuing higher education in other cities and this is where the crux of the next big opportunity lies for Indian real estate. In the past, students only had to choose PG (paying guest) options and also smaller apartments on rent. Both of these options have their positives but there are quite a few cons as well. The personal touch was missing in terms of PG accommodation while renting a smaller apartment was often an expensive proposition for youngsters.

Student housing or co-living (as it is called globally) has entered the Indian realty space with gusto and will only gain steam going forward according to industry experts. There are several co-living start-ups and other players that have forayed into the student housing segment, thereby creating a plethora of new opportunities for real estate developers as well.

How student housing has the potential to be a growth driver in the future

Co-living or student housing players are now offering homes away from home for their younger customers with all the necessary amenities and facilities and also communities of people who are like-minded. Nestaway was the first major player in this space back in the year 2015 and there are several other entities in the market today including YourOwnRoom, Zolo, SimplyGuest, StayAdobe, Flathood, Placio and Colive. The companies have cumulatively raised more than $212 million in overall funding over the last four years and Nestaway alone has raised $145 million from several investors including biggies like Tiger Global.

Oyo is arguably the biggest new player to foray into the student housing space. Oyo has already raised a sum of $1 billion as funding and co-living should be a vital part of its plans going forward. Zolostays has also raised a whopping $35 million as part of its latest funding round and WeWork is also planning to come out with its WeLive co-working brand in the Indian market.

How the market in India is shaping up

Co-living or student housing is definitely gaining ground with several investors and biggies taking an interest in this space. Here are some key market facts worth noting:

  • Co-living or student housing ticks several major boxes since it offers students a homely ambience, like-minded co-residents and all necessary amenities desired by youngsters nowadays.
  • There is a market gap and reports estimate that the co-living start-up segment may cross $2 billion by the year 2022 itself.
  • The whole segment encompasses PG (paying guest) accommodation and also several real estate players. The entire market is valued at roughly $93 billion over a period of 10 years or so.
  • A large chunk of demand will arise from young students and also professionals.
  • 50,000+ Indian colleges will ensure sizable demand with more than 31 million students to tap and counting.
  • College hostels can at the most house 3.4-3.5 million pupils while the overall market need is close to a whopping 9 million beds.
  • Indian students are forever looking for housing options which are affordable and convenient at the same time. They will appreciate organized choices instead of unorganized options which cannot offer any standardized experiences and facilities.

In fact, several players are reporting handsome growth as well. For instance, Oxfordcaps is a student living start-up that has grown by a whopping 30 times in only 10 months with a tally of 6,000 beds and counting from only 200 when it started its journey. The start-up has raised handsome funding and is based in Delhi and Singapore.

It is now looking to foray into markets which are major educational hotspots such as Pune, Bangalore, Indore, Ahmedabad, Dehradun and Jaipur. Zolo is based in Bangalore and is aiming for 50,000 beds by the end of 2019. Nestaway already had a base of 50,000 tenants by the last quarter of 2018 and is aiming to raise more funding for combating Oyo which has targets that are somewhat similar for this year across 10 big Indian cities.

Why co-living works and what industry players are making of it

As per several reports, 18-35 years is a predominant age group that will drive the growth of the co-living or student housing segment in the future. This segment accounts for a handsome 34% of the overall population of the country. Co-living offers good and standardized accommodation options for those migrating to other cities albeit at affordable rates with all the amenities required and a convenient experience overall. Co-living spaces offer total freedom for tenants in terms of food preferences, habits, demands made by landlords, big security deposits or having friends over.

Every aspect is well managed within a single rental rate which includes maintenance, service, electricity, water, Wi-Fi and more. The scope of community bonding is also a major draw. Zolo, for instance, has its own app for tenants to raise either complaints/requests with regard to utilities, repairs, maintenance, cleanliness and other aspects directly with the property manager. Several co-living biggies are now tying up with leading real estate developers. Salarpuria Sattva has provided funding for Colive while WeLive has tied up with Embassy Group. Oyo will be acquiring buildings and re-fitting them as part of its business model according to reports. Stanza Living is another big player in the space and it has already launched 5,000 beds in Bangalore over 27 properties and these are located in major educational hubs like Yelahanka, Bannerghatta, Electronic City and Koramangala.

Stanza Living has more than 15,000 beds across the country and offers accommodation which is furnished and with common zones. There are chef-tailored menus for meals, 5-star laundry facilities, housekeeping solutions, 24-7 security services and high-speed Wi-Fi among other amenities available. Stanza also has Stanza Social where all residents get a special calendar of events like sports and festivals, musical/movie nights and so on. Stanza Springboard offers activities such as industry interactions, classes for resume building and more.

Going forward, the student housing or co-living segment should propel considerable growth in India’s real estate market. More developers will either tie up with these co-living start-ups and brands or will be supplying purpose-built accommodation to them. Real estate developers will naturally be interested in coming up with properties that are tailored to meet the needs of this market. When it comes to new opportunities to grow for Indian real estate, the more the merrier!

Resident Editor