Goldman Sachs Group Inc.-backed student housing startup Good Host Spaces Pvt. Ltd is aiming for a fourfold expansion, from the current 14,000 beds to 65,000 beds in the next 18 months, at a time when India’s student housing space is seeing strong demand with robust growth potential.
The 18-month-old company, co-owned by Housing Development Finance Corp. Ltd (HDFC), currently operates in Jaipur, Bengaluru, Manipal and Punjab, and plans to be present in more tier-I and II cities, across all price points.
The current demand for Purpose Built Student Accommodation (PBSA) in India totals more than 8 million bed spaces, which is expected to grow at 8% annually to 13 million beds by 2025, according to the Global Student Property 2019 Report by Knight Frank. Around $100 million was invested into India’s PBSA market in 2018.
Good Home Spaces partners with colleges to provide specialized, custom-built student housing services. The partnership provides an opportunity for educational institutions to monetize their non-core student housing to pour back into their core business of offering education. The startup takes a long-term view to upgrade, invest in and run the on-campus student housing.
“...Many are trying to build a real track record around the opportunity of student housing, including off campus models combined with living with non-students and temporary stay, single adults. Our approach is a differentiated ‘on campus student housing’ model that partners closely with the university to maintain, not just quality protocols, but also safety, cultural and disciplinary standards in educating children," Nimesh Grover, chief executive officer, Good Host Spaces, said in a telephonic interview.
The annual rentals per bed vary from ₹60,000-250,000, offering flexible price points.
Just like co-working and co-living, institutional investors are backing student housing startups that have mainly come up in the last two years. Stanza Living, funded by investors like Sequoia Capital, Accel Partners and others, has reached a pan-India inventory of 22,000 beds. In 2018, Warburg Pincus and Lemon Tree Hotels set up a joint venture, Hamstede Living Pvt. Ltd, to invest ₹3,000 crore to build full-service accommodation for students and young working professionals.
“The bulk of the student housing demand is serviced by the unorganized sector comprising of rented accommodations and private hostels. The demand-supply gap coupled with strong fundamentals of the sector have led to an increase in investor interest to develop and operate well-located, high-quality purpose-built accommodation," said Saurabh Mehrotra, national director of advisory services at Knight Frank India.