Piyush Gupta

2 CO-LIVING – REDEFINING THE LIVING SPACE CA Piyush Gupta CO-LIVING – REDEFINING THE LIVING SPACE 1 1 Co- living Concept ….. Co-living is a form of housing which combines private living spaces with shared communal facilities. The idea of co-living is to create a community centered environment that not only provides privacy in living arrangement but also promotes social contact through community events. The idea is a not new concept. It dates back to medieval period when monks were used to live in monasteries or use of ‘dharamshalas’ by people while travelling between cities. Broadly various factors contributed in evolution of this concept which includes rapid urbanization, higher property costs, millennial movement in job search, increasing student movement for higher education, etc. Co-living and India – Synonymous As per the JLL report, Indian Co-living market is an opportunity of 1 trillion by 2023. Based on the facts below, this number seems attainable. As per the census 2011, nearly 40% of the work population are migrants. The migrant workforce stands at 4.7 Mn in 2018 which is estimated to reach at the level of 7 Mn by 2023. Furthermore, co-living demand also arises from student housing. Out of the total demand for student housing, 29% is met by the in-house university campus. This gap is expected to increase slightly by 2023. This unmet demand is clear opportunity for Coliving operators. Management Contract ZoloStays, ZiffyHome, CoHo Operator acts as service provider and manages the properties and the complete experience for a commission. Lease and Operate Operators lease buildings from owner or builder and provided them either a fixed rental or share in revenues. ZoloStays, Placio, Nestaway Hybrid Model Business Models Few Operators follow a hybrid model of lease & operate and management contract. Franchise Model – Partner with ZoloStays, Placio property owners having properties near institutes, universities and large corporate parks, through franchise-owned company managed model. ZoloStays, ZiffyHomes, CoHo CO-LIVING – REDEFINING THE LIVING SPACE *Clockwise 2 Particulars Revenue ($ millions) Number of Employees Year in which Found Funding ($ millions) Investors Zolo Stays 6.2 Stanza Nestaway Colive 6.7 Oyo Live 2 Your Own Room 1.1 CoHo 1.6 Stay Abode <1 2 500 750 900 160 200 22 26 50 2015 2017 2015 2018 2016 2019 2016 2015 42 70.1 109.3 - 11 - 1.4 - - Nexus Trifentia - Matrix - Accel - Sequoia -Falcon Edge - IDG Ventures - Chiratae Ventures - Goldman Sachs - University California Bootstrapped - - Ncubate - Salarpuria Satta Group 2.5 - The Co-living industry has seen recent development in government activity. The Model Tenancy Act, 2019 has been introduced. It aims to make renting more lucrative for both, landlords and tenants, by plugging the numerous gaps that currently exist in the policies regulating the rental housing segment. The key feature includes discourage overstay of tenants, make eviction of tenants easy, cap security deposits demanded by landlords, regulate increase in rental by landlords. - Furthermore, large players like OYO and Wework have made their entry in the Indian Co-living market with Oyo Live and Welive respectively. These companies have added advantage of having similar business model and deep pockets for cash burn. - The large real estate players like Godrej, Gaurs Group, ASF Group etc. have identified the opportunity of Co-living spaces and developing the property specifically suited for the industry. Godrej has also tied up with ZoloStays to develop the property in Bangalore suited for Co-living industry. CO-LIVING – REDEFINING THE LIVING SPACE 1 3 ZoloStays – Detailed Profile Business Model and Working of ZoloStays ZoloStays works on a revenue model which has two segments for benefitting bachelors and students. The working of Zolo is a methodical yet straightforward process. The real-startup takes residential towers from builders on a lease, which is called as “Zolo Select”, where it manages and provides all amenities to tenants. In this “Select” segment they provide 40% accommodation to 40 years old and above occupants. Another model or segment called as “Zolo Standard” where they lease out small buildings in which premium amenities like club, tennis court, pool, etc., don’t exist and these buildings consist of 50-70 rooms. Generally, graduates prefer to choose Standard segment which comes at an average of Rs 6,000 to Rs 8,000 per month for twin-sharing. Where in, Select side rooms start from Rs 12,000 on an average. Funding Rounds Series of Funding Investors Equity - Trifecta Capital Series B - IDFC PE Fund IV - Nexus Ventures IV Ltd - Mirae Asset NAVER - Mirae Asset GS Retail New Growth Fund I - Nexus Ventures IV Ltd - Nexus Ventures IV Ltd - Nestavera Investment Advisory Solutions LLP - Nexus Ventures IV Ltd - Nexus Ventures IV Ltd Series A1 Series A Series Seed 1 Series Seed Amount (Millions $) 7 30 5 Founders - Nikhil Sikri, Cofounder & CEO - Nikhil is an MBBS graduate from AIIMS and practiced as a doctor in Singapore IMH. Later he pursued business management at the ISB Hyderabad. For a short period, he worked in the corporate sector with Cerner Corporation and Deloitte. - Akhil Sikri, Cofounder & CTO- Akhil Sikri is a computer science engineering grad from IIT Delhi. Akhil gained experience by working as a software engineer with Net App, Kiwi Inc. and Jagriti Yatraas. CO-LIVING – REDEFINING THE LIVING SPACE 4 GLOBAL MARKETS \ Name of Player Common Country USA Business Model Operator Funding (In $ Millions) 63.4 Ollie USA Operator 15 Starcity USA Owner operator 20.3 WeLive Bungalow Living USA USA Operator Operator 64 Investors - Norwest Venture capitals - Solon Mack Capital - Circle Ventures - Justin Mateen - Aviva Investors - The Moinnian Group - Justin Mateen - Texas Employees Retirement System - Bullpen Capital - Alrai Capital - Vander Capital Partners - Softbank - Finitive - Khosla Ventures - Wing Venture Capital Out of above, WeLive is active in India. The SoftBank-backed company is currently piloting the project in US and is in talks with its Indian partner, Embassy Group to launch it in the country to tap the growing numbers of millennial. Bungalow Living – Detailed Profile Problem Statement - “We are looking to solve housing affordability, and loneliness and community” Business Model Bungalow works with existing homes, rather than building new buildings. For some properties, Bungalow follows a WeWork model where it signs a master lease with the homeowner and then add bedrooms to the property. It then makes money on the difference between the residents’ rent and what it owes the homeowner. However, Bungalow is also experimenting with a business model to more closely align with Airbnb. In the new business model, Bungalow still handles the roommate matching and community, like furnishing the common areas and running a social calendar, but it CO-LIVING – REDEFINING THE LIVING SPACE takes a cut from the rent paid to the homeowner, similar to the service fee Airbnb charges its homeowners to list its rentals. Founders - Andrew Collins, CEO & Cofounder – Andrew had done his bachelors from Princeton University and MBA from The Wharton School. Before co-founding Bungalow, Andrew had been placed as Brand Manager in Red Bull and Success Manager in Medallia Inc. - Justin McCarty, COO & Cofounder – Justin had done bachelors in Economics from Cornell University. He had experience in corporate strategy in Uber and Goldman Sachs. Upcoming Models not prevalent in India Microliving – In this model, community tenants do not share units. Unit size are minimized. In-unit-amenities such as kitchen and bathroom are explicitly not shared. Tenants often prefer to live without roommates. Some of the startups already running in this space are Nichols Partnership, Flats, Monadnock Development LLC., and Panoramic Interests. Uberisation of Real Estate This word Uber is not new to us but the word Ubersiation has disrupted various business in the shorter period. As per the Google, Uberisation means a business model in which services are offered on demand through direct contact between a customer and a supplier, usually via mobile technology. Thus, in context of real estate, it means connecting the renters and suppliers. It is the small beginning of big disruption coming in real estate sector. Earlier, owing a home is social stigma and emotional attachment. With growing nomadic culture among millennial, in search of better job, movement within cities is the new normal. The movement of millennial gives rise to demand for Co-living spaces or micro-living or rented houses. Real estate sector will see this change with rising education level within India. CO-LIVING – REDEFINING THE LIVING SPACE SOURCES-. Owler Crunchbase Knight Frank Report – “Co-living Rent a Lifestyle” FICCI Report – “ Coliving Reshaping Rental Housing In India” Crushman and Wakefield report – “Coliving- Survey of the co-living landscape” Ministry and Corporate Affairs Database Articles on the Co-Living model by i. INC42 ii. Outlookbusiness iii. Economictimes iv. Housing.com v. Thehindubusinessline vi. Thespaces.com vii. Techcrunch.com CO-LIVING – REDEFINING THE LIVING SPACE