STARTUP SPECIAL .....MAKING STUDENTS FEEL AT HOME

STARTUP .. MAKING STUDENTS FEEL AT HOME





Student housing is big business, but is almost completely unorganised today.
A slew of startups is trying to change that by making quality offerings and standardising them across their properties. As colleges reopen after the summer vacation, parents seem to like what they see

When Larisha Naidu was coming from South Africa to study at the Whistling Woods International Institute in Mumbai, she was a little sceptical about finding good accommodation. Feedback from friends who had previously travelled to India provided no comfort.

To her surprise, she found one that was almost exactly the kind she wanted. It was a property maintained by Noida-based startup YourSpace, one of the several ventures that today operate in the student housing space in India. It had wi-fi, 24x7 support systems, in-house gym, salon and library . “It was extremely clean and quite comfortable.And compared to other places, this seemed more affordable,“ Larisha said.

Student housing is big globally. In India, it has been a largely unorganised business, and their general standards are shoddy. But some startups are beginning to change that. Real estate consultancy JLL estimates India has 34 million students in the higher education space, and that the ten leading states in terms of the number of students have an unmet demand for good housing of 30-60%.

Uday Lakkar, founder of student housing venture Coho, which was launched in mid-2016 and which today has around 500 beds, says student accommodation is not just an acute neces sity, given the shortage of quality accommodation, but a huge $10 billion-plus market opportunity in India.

Multiple startups have entered the space since 2015 ­ YourSpace, Coho Dorms, Yoho, Placio, Wudstay , Arusha Homes, Studentacco, PepRooms, TheUniversityLiving, and AmberStudent.Most are focussed on larger cities, but a few also offer facilities in smaller towns like Kota, Jaipur and Manipal.

Most work as aggregators of properties. YourSpace and Coho take properties on long-term leases, refurbish them, and charge the students. Wudstay and Placio partner with the landlords and charge the landlord a fee for maintaining the property .

The properties are listed on their websites and apps, where any student can browse and find his or her requirement and schedule a visit.

So it's an asset light business model, like Oyo's in the budget hotel industry. JLL estimates rental yields can be as much as 15-18%.

“We started off as a bootstrapped company (not taking external funds), and we have been profitable at the unit level from the very beginning. The model can be highly profitable with the right kind of pricing,“ says Prafulla Mathur, CEO & founder, Wudstay, which has around 1,000 properties across the country providing co-living spaces for both working professionals and students.

Dheeraj Jain, angel investor and partner at Redcliffe Capital, says profitability in this model depends on scale. “While there are no entry barriers for smaller players, the cost increases significantly for larger players. I feel that mid-level players would be able to reach profitability at the earliest,“ says Jain, the first investor in Coho.

Shubha Lal, one of the three co-founders at YourSapce, says cur rently admissions are on in all universities and “with the kind of response we have seen from parents, we are sure of a 100% occupancy rate in all our four properties.“ YourSpace, founded in July 2016, has two properties in South Delhi, one in Greater Noida, and one in Mumbai.

Many of these players are tying up with colleges. That guarantees higher occupancy rates. Coho provides accommodation for students at the Faculty of Management Studies in Delhi. “The idea of a fully managed and organised accommodation works really well for us as they take care of everything from maid to repairs,“ said Anurag Tola, student second year at FMS.

The price for a room ranges between Rs 5,000 and Rs 25,000, depending on the services provided. Food, wi-fi, cleaning, round-the clock security , and 24x7 support are basic services. But it could also include centralised airconditioning, indoor salon, gym, library, on-call doctor, medicare, laundry , fitness classes, and career counselling sessions.

“More than just accommodation, we are building a brand and a community for the students, where they connect, bond and grow together. We have approval ratings and feedback systems, where our customers can rate their roommates as well,“ says Rohit Pateria, co-founder of Placio, which was founded in March last year.

Most players have ambitious expansion plans. Coho plans to add 2,000 beds in the next 12 months. Many started off as bootstrapped ventures, but are now in talks with investors to raise funds to grow.

JLL consultant Subhankar Mitra says that before startups can come into the picture at scale, there needs to be quality, standardised inventory, and it cannot be done by local real estate builders. He feels that it will take another five years before startups can meaningfully come into this space.

Sunil Rao, partner at venture firm Lightspeed India, says he currently sees more interest in the single working professional accommodation than student housing. “It is operations-intensive and not necessarily an aggregator's game. Entrepreneurs looking at this segment need to realise that it would be their responsibility (to ensure standards). Unlike what we all thought earlier, bringing quality control and standardisation takes time,“ he says. The failures in and travails of the budget hotel aggregation space is a cautionary tale for all.

With Inputs from Anand J

 

Shubhra Pant

     TOI 24JUL17