 "Rohit Pateria, Placio founder")
When Latika Gupta shifted to Noida from Kolkata this year, she struggled in finding a home away from home. Where paying guests lacked desirable quality, rented flats required her to hunt for flatmates to cover for the extra cost. That’s when she came across Stanza Living — a co-living space where students can shift with nothing but clothes.
Founded in April 2017, Stanza Living recently raised Rs 730 million ($10 million) in an investment round led by Sequoia India. This is in addition to Rs 130 million ($2 million) that the company had raised in its first round of funding from Matrix and Accel Partners.
Anindya Dutta and Sandeep Dalmia founded the company upon noticing a visible gap in the country’s unorganised student accommodation space that often lacks in quality infrastructure.
Concept
Left to right: Sandeep Dalmia and Anindya Dutta, founders of Stanza Living
Stanza Living offers residences on an individual or sharing basis of up to three people in a room. These rooms come fully equipped with furniture, WiFi and other services such as housekeeping, laundry and food. While there is no brokerage involved, a refundable security deposit is part of an 11-month rent agreement.
The co-living start-up also focuses on building a community for students by organising events such as movie nights and by providing lounge rooms, fitness corners, foosball tables and other entertainment units.
The company, by using machine learning and big data in understanding behavioural patterns, is also looking to give students personalised services. It provides two engagement programmes to residents — Stanza Social and Stanza Springboard. Through the former, students participate in an array of indoor and social events and access services from Zomato, Healthkart, Lenskart, BookMyShow, among others. And, via Springboard, students can opt for online courses, personality enhancement programmes, corporate internship opportunities and skilling classes.
Moreover, the Stanza Living app allows a resident to avail of any services, file grievances, order food and track the status in real-time. It operates over 15 residences in Delhi-NCR with a total capacity of 2,000 beds.
Opportunity
Stanza Living is not alone in offering alternatives to the old-fashioned way of subletting apartments or houses. Several other firms like CoHo, RentRoomi and Zolo Stays are part of the evolution in the sharing economy sector. CoHo, which appears to be the leader in this segment, also offers villas for renting, besides flats. It has a 2,500-bed chain across Noida, Delhi, Gurugram and Bengaluru.
Just like Ola and Uber disrupted the traditional taxi market or Airbnb and OYO are redefining hotel business, co-living is a relatively modern space that is building small communities of people living together. Delhi alone is expected to overtake Tokyo as the largest urban agglomeration by 2030 and see an influx of 9.6 million by then, according to World Urbanisation Prospects, a 2018 report by the United Nations’ population division.
These co-living start-ups are attracting large investments as well. So far this year, such firms have raised $55.4 million from investors.
Revenue
Stanza Living offers residences with 45 beds to up to 650-plus beds in a single set up. These properties are taken on a long-term lease by the firm. The rent varies from Rs 7,000 to over Rs 20,000, depending on the location and the type of living arrangement. For instance, the rent for a double-occupancy room in South Delhi would start at Rs 9,000 and a triple-occupancy at Rs 7,500.
As the firm is just over one-and-a-half-year-old, it is yet to achieve breakeven. “We see a massive disruption opportunity in the student co-living industry that generates annual revenues worth $14 billion. As per industry estimates, nearly 20 million students migrate internally annually on average and there is a requirement of nearly 11 million beds. This is the market that we are targeting,” said co-founder Dalmia.
Road Ahead
With the recent funds, the firm envisages to grow its capacity five-fold of its current size in the next one year and foray into new markets such as Pune, Hyderabad and Bengaluru in six-eight months.
“We will achieve our revenue target of Rs 200 million by the end of May 2019. We expect to scale our revenues in line with our growth,” said Dalmia.
Rohit Pateria, Placio founder
Expert Take: 'Shared accommodation is a promising business'
Shared accommodation is very promising as a business opportunity. Many players are only targeting Bengaluru and NCR markets. However, the opportunity is emerging in many Tier-II and Tier-III cities.
The biggest challenge is quality supply and operational execution. The business is capital intensive and entry barrier is limited, hence scale is the key with proper capitalisation. Stanza has been doing a good job in giving quality facilities and investment will give them further growth impetus.
With the size of the market growing rapidly, there is a scope for all the existing and new players.
There are some major challenges for all the companies operating in this space, including quality real estate, regulation, price acceptability and operating margins.
Shared accommodation is very promising as a business opportunity. Many players are only targeting Bengaluru and NCR markets. However, the opportunity is emerging in many Tier-II and Tier-III cities.
The biggest challenge is quality supply and operational execution. The business is capital intensive and entry barrier is limited, hence scale is the key with proper capitalisation. Stanza has been doing a good job in giving quality facilities and investment will give them further growth impetus.
With the size of the market growing rapidly, there is a scope for all the existing and new players.
There are some major challenges for all the companies operating in this space, including quality real estate, regulation, price acceptability and operating margins.
