2019: The Year Of Major PE Deals In Indian Co-Living Space

New Delhi: The More The Merrier is one idiom that certainly applies to the private equity (PE) deals that shaped up the India co-living market in 2019 as this real estate industry segment continues to throw up exciting opportunities and outshine the otherwise lacklustre residential property market in the country.

PE funds from world over tried to grab the opportunities presented by the large base of student and millennial population in India which is looking at shared spaces more than ever before. 

Right in the beginning of 2019, co-living player Zolostays of Bengaluru got USD 30 million from IDFC Alternatives, Mirae Asset and Nexus Venture Partners. The founder of OLX Alec Oxenford, Olympia Developers of Chennai and Patni Computers Family Office also participated in this investment. With its revenues jumping four-fold in 2018, Zolostays was able to raise this amount which will help it to expand to new geographies. The company, which was started in 2015, already had 157 properties under its management and targeted 50,000 beds under oration be the end of 2019. 

Another co-living space provider Colive raised USD 9.32 million from Salarpuria Sattva Group, a Bengaluru-base realty player in April 2019. Colive has aimed to have one lakh beds under its belt at the end of two-year period from the time of investment. It had 12,000 beds under its management then. 

Later in the year, another Bengaluru-based player Nestaway got about USD 5 million from Goldman Sachs. Its existing investors IDG India and Tiger Global also participated in this round of funding. Nestaway too aims to grow many fold in the Indian market. 

Coimbatore-based Isthara Parks Pvt Ltd, another co-living player got funding from a PE fund of JM Financial Ltd. The funding was to the tune of USD 5.7 million. Isthara plans to use the money for expansion not just in India but in other cities of Asia also.

It was not only Bengaluru-based companies that were seizing the PE deals in the country. Delhi based Stanza Living, another co-living space provider, picked up an undisclosed amount from PE fund started by billionaire investor Sam Zell. The company has co-living properties in mostly student centric cities. The money would be used for expansion in various cities.

Many real estate experts feel that the action has only begun and there are vast opportunities that lie ahead for the co-living market in India. There is absolute dearth of accommodation for students in the country. The total number of students living in hostels within college campuses in India was just 34 lakh in February 2019 while there were more than 89 lakh students who were living in other forms of accommodation near the colleges, according to a report by real estate portal Proptiger.com. 

And if this huge gap presents lucrative business chances for the players, then large base of millennials offer another goldmine to them. There are about 50 percent people in the age group of 18-35 in India who are willing to pay up to Rs 15,000 per month for accommodation in top cities like Mumbai, Bengaluru and Delhi, according to a report by Knight Frank. 

Delhi NCR will account for about 40 percent of the co-living industry by 2023 and Mumbai will account for another 25 percent by then, according to a joint report by JLL and Federation of Indian Chambers of Commerce & Industry. The co-living industry is expected to grow at 17 percent annually for the five years and reach a staggering USD 14 billion mark.