In the last few years, the Indian startup ecosystem has seen numerous enterprises betting on co-living space. Some were pre-established realty based companies that extended their operations in the segment, and some were completely new startups that assumed co-living to be the premise of their business.
These companies have been able to raise significant funds as well. Following these developments, the trend definitely suggests that the market for co-living spaces is vast and promising.
To quantify the potential of this promising opportunity, PropTiger has released a report reflecting the demand-supply figures in the co-living market.
The report deems the co-living spaces to have the potential to become a $93 billion industry.
On the demand side, the scale tips to a massive 46.3 million requirement of beds across the country. Currently, about 8.9 million beds are required for student accommodations alone while college campus-based hostels only provide housing to about 3.4 million students.
The organised sector only counts for about over one lakh bed offerings. So, where do the rest of the demand go? The unorganized sector of PGs and rentals.
Co-living v/s unorganised
Even though the demand deficit is taken care of by the unorganized sector, it always has a tonne of problems attached to it, which an organised industry can solve.
For starters, PGs, rentals, and unorganised hostels have a huge safety concern clouding it. Further, people living in these places more often than not become a victim of fluctuating and exploitative prices with substandard facilities. The hygiene in terms of cleanliness, maintenance, and food are mostly always compromised, and the residents have to suffer.
Further, there is no accountability, as just like the sector is unorganised, so are the reviews, and so is the redressal mechanism. This renders the occupant completely helpless and homeless at times.
Here, co-living has the potential to become the knight in shining armour. The majority of startups operating in the sector are run through an internet based website or application. The services provided, costs and redressal mechanisms are standard and efficient in most cases.
With a massive number of customer reviews for a new occupant to refer to, the filtering process becomes efficient. A user can also compare prices and discounts on a smoother UI.
Further, it also makes changing cities easier for a student or an employee, as they don’t have to check out the properties prior to transfer in person.
Startups and funding
Now let’s talk more about the enterprises that have forayed into co-living and raised fundings as well.
First of all, India’s largest budget hotel chain OYO Rooms had forayed into co-living under the brand name OYO Living around mid-2018. Entrackr had exclusively reported the company’s operations starting with Delhi NCR, and the plans to expand them to Bengaluru, Hyderabad, and Pune.
To boost its co-living vertical as well as strengthening Townhouse, OYO is also acquiring Keys Hotels’ Indian operations with keeping the same in mind.
In another huge development, US-based private equity giant Warburg Pincus had formed a joint venture with mid-price hotel chain Lemon Tree Hotels named Hamstede Living.
The JV would offer co-living spaces. Both the firms had poured in Rs 1,500 crores each, starting Hamstede Living with a massive fund of Rs 3,000 crore.
In other fundings and forays, WeWork, eyeing the opportunity, had launched coworking-cum-co-living spaces under the name of WeLive. Startups like Stanza Living, ZiffyHomes, CoLive, ZoloStays have raised over $40 million altogether.
NestAway, the largest of these fishes already has $100 million in its pond and is in talks to raise another $150 million.
It is a result of the aforementioned market potential that becomes a large factor behind the investments and forays. However, the demand deficit is still humongous and untapped.
Hopefully, the enthusiasm in co-living spaces will spur and the potential of the industry will be closer to being realised.
The figures from the PropTiger report were quoted from a Financial Express article.