Paris House in Greater Noida’s Knowledge Park-3, is not your run-of-the-mill student hostel. There are the usual—shared rooms and long corridors with a steady flow of pyjama-clad students. But the building—whose interiors are an explosion of turquoise, red and yellow—also has biometric access, well-furnished common rooms, and a functional gym. And all student-facing functions happen via an app.
With over 400 beds, Paris House is student housing startup Stanza Living’s largest property in the Delhi NCR region. It caters to several colleges in the area, with students from the likes of GL Bajaj institute of technology and management, Galgotias University and Sharda University filling its beds. One of the managers says the property is at 100% occupancy, with more demand than they can absorb. In response to this, Stanza—arguably India’s largest student housing company, with over 22,000 beds—is developing another hostel adjacent to Paris House.
While Stanza may be the largest, it is by no means the only company trying to address the unserved demand for student housing. Others, such as Singapore-based OxfordCaps and Bengaluru-headquartered Campusville, are also looking to conquer the student housing market. Priyanka Gera, who co-founded OxfordCaps along with CEO Annu Talreja, has pegged the market opportunity for student housing in India at around $20 billion.
The potential is unmissable. According to a 2017 report on the Indian student housing market by real estate consulting firm Jones Lang LaSalle (JLL), 34 million students are pursuing higher education in India. Of these, approximately 10.4 million students migrate within the country for want of better education, forming a lucrative but underserved market for the likes of Stanza.
On average, student housing companies tend to charge between 1.3 lakh ($1,900) to 1.6 lakh ($2,300) a year on average, markedly more than the Rs 50,000-80,000 charged by hostels in government colleges, but generally on par with residence fees at private institutions.
While these prices may deter students seeking cheaper options, it still leaves a comfortably large pool of students in search of a more premium experience. Price-sensitivity is something Matrix Partners, one of Stanza’s investors, researched before backing the company. Tarun Davda, partner and managing director at Matrix, says the fund conducted a survey with parents which revealed that 30-40% of parents were willing to spend more for quality accommodation and associated services.
With higher-than-average rentals and fixed capital expenditure (capex) costs, entrepreneurs are looking to cash in and investors like Matrix are backing them to the hilt. Having seen overseas markets generate excellent returns, investors are now queuing up to bankroll a similar success story domestically.
Stanza has raised $16.7 million, including venture debt, from investors like Sequoia, Accel Partners and Matrix Partners. OxfordCaps, meanwhile, says it has raised $10.5 million from Times Internet* and Kalaari Capital. Stanza Living and OxfordCaps are each looking to raise $50 million over the coming few months.