“One of the biggest casualties of eight years of college is... well... right before you: 15 kg of unadulterated weight that just won’t go away,” said OxfordCaps co-founder and CEO Annu Talreja during a presentation at a summit for startups last year, setting off chuckles among the audience. “College changes my definition of the food pyramid,” she said, pointing to the projector screen which showed one titled “Casualties of Hostel Life”. “I stuck to the bottom part of it [liquid diet, carbs, fast food, and free food].”

Talreja was talking about a time more than 15 years ago. Yet, nothing had changed, she said. Parents are earning many times more and spend more for their children, but problems with student housing solutions such as paying guest (PG) facilities when she was a student remain: unhealthy and undercooked food (“... rotis so dry you could shake off the uncooked flour ...”), poor hygiene, cramped rooms lacking ventilation, and nosy landlords. “We are reinventing this experience at OxfordCaps,” she said.

Student housing is largely an unorganised and fragmented sector. Real estate consultancy firm Anarock Property Consultants says of the 37 million students pursuing higher education in India, more than 75% live away from home. Existing hostel facilities can accommodate only 18%-20% of this migrant student population.

Since the untapped opportunity is huge, it is not just OxfordCapsthat wants to reinvent the hostel experience. The past two years have seen a clutch of startups becoming active. Stanza Living, Tribe, Placio, and Campus Students Communities are some of the major ones. Recently, the storied OYO Hotels and Homes announced its plans to enter the student housing market under its co-living brand OYO LIFE. “For us at OYO LIFE, student housing is a key use case under the larger rental housing segment umbrella which we are focussed on in India,” says Rohit Kapoor, CEO, new real estate businesses, OYO. “We are seeing an influx of foreign investors and multiple startups across the country catering to this space.”

“Student housing is a large and underserved need globally, but in India, the supply-demand gap is particularly stark because of a rapidly growing outstation student population. This outstation demand is currently being met by fragmented, unorganised, and poor quality supply,” said Navroz D. Udwadi a, co-founder, Falcon EdgeCapital, when it picked up a stake in Stanza Living this July.

With the rise of discretionary spending and a tech-savvy young crowd, student-housing startups are looking to make the most of it by providing fully furnished, fully maintained, Internet-ready accommodation with services such as 24-hour mess and transport. Chillaxzones have foosball tables. For the health conscious there are tennis courts and gyms. And there is a doctor on call. Want something fixed? Do it with a tap on your smartphone.“We can see the food menu and whenever we have any complaints regarding furniture, housekeeping, electricity or Wi-Fi, we just register a complaint on the app and within a day it’s fixed,” says Riya Saraf, a B.Comstudent at Daulat Ram College in Delhi and a resident at a Stanza Living hostel in NorthCampus, University of Delhi. Saraf is originally from Patna.

Nothing compares to home, but by offering the next best thing, startups like OxfordCapsand Stanza Living are scripting the newest chapter of the sharing economy in India. Industry estimates peg the number of operational beds in student housing at 148,000. And there is plenty of room for growth. Anarockpegs demand for student housing at more than 10 million beds across major cities of the country. “The market size of student housing in India was approximately ₹1,267 crore in 2018 and is likely to touch ₹2,400 crore in2020,” says Anuj Puri, chairman, Anarock.

India is kind of late to the party, for tech-enabled student housing and co-living spaces are popular in most developed countries and are magnets for venture capital funding. Some founders like Stanza Living co-founder and managing director Anindya Dutta found in-spiration when they were living abroad. Dutta has spent six years in London working with Goldman Sachs and Oaktree Capital, which were invested in the student-housing market.“I had the opportunity to see this space from close quarters and that’s where the seed of the idea came from,” says Dutta.

OxfordCaps’ Talreja and co-founder and COO Priyanka Gera (both were roommates at Sushant School of Art and Architecture, Gurugram, in 2001) were working in Singapore when they decided to start up. Singapore made the ideal testing ground for various reasons.“We were looking at launching in a more mature market where real estate regulations were more standardised, the kind of properties available was standardised, and the use of technology was high in all aspects of life,” says Talreja. “Also, in Singapore the primary customers[for student housing] are all from developing economies; 30% to 40% of our customers areIndian. So we got an exposure to dealing with the same demographic, but in a much more matured and regulated environment.”

Oxford started its India operations in 2018—a year after it launched in the island-city, where it has 500 operational beds. The NCR-based startup has since clocked 75x growth with more than 15,000 beds across 12cities in India. Last year it raised $8 million through Series A funding led by TimesInternet. Existing investors Kalaari Capitaland Silicon Valley-based 500 Startups also participated in the funding round. “We will be raising another larger round of funding as we aim to reach 100,000 beds by next year[2020]. We are also looking at expanding into Indonesia and Malaysia,” adds Talreja.

Student housing offers high rental yields of 14%-17%, higher than that in asset classes like residential and commercial properties, but real estate developers have not been very active in the space. “The fact [is] that the segment is still in a very nascent stage with only a few success stories to boast of. They [developers] are being cautious. But as and when the sector matures, there will be increased investor and builder interest to penetrate into this segment,” says Puri.

There is another reason why developers are in wait-and-watch mode. Given the high expectations of millennials, developers need to live up to them to succeed.

“Most times, it becomes quite heavy on their pockets to include state-of-the-art amenities and yet keep rentals under check,” adds Puri.

Gera says student housing is more about hospitality and is therefore operations-heavy: “Developers won’t enter into anything that is operations-heavy. And even if developers are coming up with the concept now, it’s only from the asset part of it, not the business side.”

Some developers have picked up the glove though. Bengaluru-based DivyaSree Developers has planned 100,000 beds over the next three years of which currently 4,000 are operational, says Anarock.

In August this year, Bengaluru-based real estate major Embassy Group, which runs the India franchise of co-working space provider WeWork, announced its foray into the co-living segment with its sub-brand Embassy Co-Living with plans to target working professionals and students. It has earmarked $300million-$500 million for its new bet and has got on board Kahraman Yigit, an industry veteran, as a co-founder of Embassy Co-Living. Yigit is a pioneer of the student housing market in Turkey. The group is in advanced talks with a Bengaluru-based university for a tie-up. “We could break ground by May,” says Aditya Virwani, COO, Embassy Group.

Prior to hiring Yigit, Embassy Group was looking at foraying into the co-living space with WeLive, a community-based living brand that is part of WeWork. And it was a natural option for Embassy Group, which operates WeWork in India.“

But that [WeLive] didn’t take off globally as they had hoped and the product they have in Manhattan is very different from what we are trying to create here,” adds Virwani, who also explored a partnership with a company based in London.

Since the business is heavily service-oriented, it may be in the best interests of developers to have a solid plan of action before joining the fray. “Real estate costs are only 30% to40% of the total revenue, while 60% to 70% is more operations driven,” explains Gera.

As the space heats up, it’s the students who benefit the most. “My father and I visited many PG accommodations, but we finally zeroed in on Stanza Living because of the safety features—they have biometric entry and CCTV surveillance,” says Saraf. “So far my experience has been really good.”

(This story was originally published in the January 2020 issue of the magazine.)

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