Shapoorji Pallonji Real Estate plans to start shared living and student housing projects to diversify its portfolio and capitalize on an alternative asset class targeted at millennials who rely on renting instead of owning homes, a top company executive said .
The Shapoorji Pallonji group firm, which builds luxury to mid-income homes, will build the co-living projects in Pune and Mumbai Metropolitan Region (MMR) starting next year.
Both the co-living and student housing sectors were deeply affected due to reverse migration amid covid as working professionals and students returned to their hometowns, making work from home and remote learning the new normal.
“We will start co-living and student housing projects in a measured but serious manner as an offshoot of our projects. Over the next decade, we see a huge potential because of the demographics, increased work from home and rising spend on education, and there are not many organized players. In the mid-to-long term, it has to be rolled out as a separate business, and partnered with an investor to scale up,” Venkatesh Gopalkrishnan, chief executive of Shapoorji Pallonji Real Estate, said in an interview.
The Mumbai-based company ranks among a handful of mainstream real estate developers who have ventured into the co-living space, dominated by investor-backed startups.
Earlier this year, Bengaluru-based real estate firm Embassy Group launched co-living business Olive by Embassy, targeting a growing, young working population in metros. This month, it also launched its service residences brand, ‘Olive Residences’, under an asset-light management model, in which Embassy will manage the property and earn on a revenue- and profit-sharing basis. Under the new brand, it plans to launch 100 buildings by the 2021-end.
Aditya Virwani, chief operating officer of Embassy Group, said this is an agile and scalable model with smaller properties that can be taken over from hotels or other co-living operators and managed for a fee.
Shapoorji Pallonji Real Estate has nearly 1,000 acres in and around Pune and Mumbai, with 600 acres of buildable area. Of this, it plans to do plotted development on about 100 acres, where it will build and sell villas or row houses on plots of land.
“We will build houses or villas with prototypes. We are looking to devise a product expecting the second home concept to pick up over the next year,” said Gopalkrishnan.
Earlier this year, the property developer said it will set up a $600-million investment platform in partnership with a global sovereign fund to enter India’s growing warehousing space. However, plans to launch operations this April were delayed due to the pandemic and will now take off around the same time next year.
Gopalkrishnan said the company will continue to launch projects under affordable housing brand Joyville and premium homes under Shapoorji Pallonji Real Estate.
For Joyville, there are 3-4 acquisitions in the pipeline while there are 5-6 project launches in the coming months under both brands, he said. The company recently launched Joyville in east Pune, selling more than 800 apartments costing between ₹37.5 lakh and ₹78 lakh during the launch. The project will have a total of 2,700 apartments.
