“Our sales have been zero for the last 15 days,” says Viral Chhajer, co-founder of Bengaluru-based co-living startup StayAbode.
With India in the midst of a 21-day countrywide lockdown because of the novel coronavirus pandemic, co-living companies such as StayAbode have been badly hit.
Chhajer reckons business could drop by 25% by the end of April if the lockdown extends beyond the initial 15 April deadline. Other co-living spaces reckon occupancy is down by 40-50%. Zolostays, India’s largest co-living operator, has cut its expected growth rate from 140% to about 70-80% for the year ending March 2021.
It’s a sudden reversal of fortunes for India’s co-living sector, which, by all accounts, was booming until very recently. Some of the biggest names in real estate and private equity were betting on it. In December 2019, Delhi-based Stanza Living—with more than 50,000 beds across 14 cities— reportedly reportedly The Economic Times Sam Zell invests in Stanza Living Read more raised around $50 million in a Series C round from marquee global investors such as Sequoia, Matrix, and Alteria Capital. The three-year-old startup has a $300 million valuation.
The bullishness on co-living rode on a basic premise—there was a seemingly bottomless demand for hassle-free, affordable accommodation for a large population of working professionals and students. Co-living spaces offer fully furnished accommodation, with amenities like housekeeping, food, internet, laundry, and medical assistance as well. Tenants also don’t have to interact with landlords. All this for a small premium over the rentals charged by the more limited traditional hostels and paying guest (PG) accommodations.
International property consultant Cushman & Wakefield pegs the Indian co-living market at about $6.67 billion, expecting this to more than double over the next five years.
That forecast seemed nailed-on until Covid-19 crashed the party. As social distancing becomes the new norm, founders of Indian co-living startups are unsure about how it could shape people’s mindsets with respect to community living.
For a change, nobody is talking about ramping up the number of beds—the most common metric advertised by co-living companies. Priyanka Gera, co-founder and CEO of student housing platform Oxfordcaps, has curtailed her company’s aggressive plan of adding 65,000 beds this year. The new target is about 15,000. “Right now, conserving capital is important,” she says.
The struggle is to keep the business afloat for not just the next three months, but to also brace themselves for a prolonged slowdown that will affect consumer spending.