How Bengaluru-based Guesture is making Rs 10 Cr a year with its community-driven approach for co-living
Co-living is fast becoming popular in India as urban youth and millennials increasingly opt for shared accommodation. OYO Life, NestAway, Zolo Stays, Stanza Living and other co-living ventures have already set up shared spaces across major Indian cities.
Presently, the co-living industry in India is in its nascent stages. However, purpose-driven shared accommodation has been popular for quite some time in developed nations in Europe.
Entrepreneur Sriram Chitturi (44) observed this phenomenon on his travels to the UK, Germany, and Switzerland in 2014.
Sriram, who was part of the Shanders Group established in 1918, felt investing in co-living could be the answer in a stagnating real estate market back in India.
Bengaluru-based co-living company Guesture was born from Sriram's intention to bring hygienic, safe and good quality shared accommodation to the urban youth in India.
Pramod Kumar (60), Director, Guesture, explains:
"Guesture is a 100 percent subsidiary of the Shanders Group, which has varied interests across manufacturing, agriculture, real estate development, defence and rental housing. Sriram started Guesture as the operating arm for Shanders' co-living venture."
Pramod adds that Sriram has invested Rs 75 crore in Guesture so far, and that the self-funded company recorded a Rs 10 crore revenue last year.
The co-living market
Started in 2015 (the same year as NestAway and Zolo Stays), Guesture was one of the early movers seeking to capture the growing demand for shared rental spaces. This co-living segment is expected to offer a business opportunity of Rs 1 lakh crore by 2023, according to a joint report by JLL and FICCI.
In a June 2019 statement, JLL India said, "The rising demand for shared renting will propel the market and offer a business opportunity of Rs 1 trillion by 2023 along with a capacity of 5.7 million beds from the previous levels of Rs 458 billion and 3.6 million beds in 2018."
Guesture is seeking to make a dent in this big market with its strategy for redefining co-living.
"Co-living is a combination of five segments, namely, real estate, technology, consumers, hospitality, and community. By offering social spaces that address these five segments, we have gone beyond co-living," Pramod says.
He says the company's customers are between 18 and 35 years old, and are largely migrants coming from various cities and towns.
"Students and working professionals face many issues related to rent, deposit, landlord, furnishing, etc in regular rented properties. They also face loneliness and depression when they come from outside. That's why they want a home away from home. Our co-living social spaces are aimed at addressing these issues by creating a community for them," Pramod adds.
A PropTiger report corroborates Pramod's idea, stating that "most of the projected demand will come from college students and working professionals." It adds, "There are over 50,000 colleges in the country, with over 31 million students. College hostels accommodate around 3.4 million students, whereas the requirement is for over 8.9 million beds."
With its sights set on tapping this huge opportunity, Guesture started with 650 beds in its first property, Alta Vista, in Electronic City Phase 1, a building which it repurposed for co-living.
It says its properties are fully-furnished with amenities such as high-speed Wifi, swimming pool, sports arena, co-working spaces, event spaces, laundry and cleaning services, meal services, shuttle services, security, and more.
Guesture charges between Rs 8,000 and 10,000 per bed per month. Pramod explains that for a 3BHK apartment, the beds in the master bedroom cost Rs 10,000 each per month. The beds in the smaller rooms cost Rs 9,000 per month, and the ones in rooms without attached bathrooms cost Rs 8,000 per month.
Guesture is now adding 2,500 beds to its other property in Electronic City Phase 2: the Guesture Dwellington.
In a statement, Sriram elaborates, “Bengaluru is the IT and university hub of India where students and working professionals come in search of opportunities. We have focussed on many aspects that are not really taken care of by the largely unorganised rental and managed housing sector. Our offerings for both students and working professionals have seen remarkable success and we are looking at scaling this further."
The company says it has tied up with Symbiosis University and it is in talks with other educational institutions to provide quality accommodation for students.
Currently, the two properties cater to working professionals and students from Symbiosis, NSB (international students), Azim Premji University, IFIM Business School and PESIT College, Guesture said in a statement.
It is also developing a 40-acre youth city in Electronic City Phase 2 - a project the co-living company claims will be based on the principles of Biophilic Design, where architecture is designed to connect people with nature.
The project is anticipated to have rental housing facilities, infrastructure for academic organisations to set up campuses, innovation hubs, shared offices, co-working spaces, food courts, infrastructure for sports and events, and more.
However, Guesture is yet to develop an app for residents. OYO Life, NestAway, Zolo Stays, Stanza Living and other players have their own Android and iOS apps.
Further, at a total of 3150 beds, Guesture is small compared to the sector's big hitters, as seen in the infographic below.
However, Pramod isn't worried. He says Guesture's app will come soon, adding:
"There are not too many players in the segment. It is still a young industry and we are charting our own course. The focus is on providing social life spaces to people and making them feel part of a community."
He also says the company doesn't face many challenges in onboarding customers, but needs to be careful about getting the right supply of real estate infrastructure as it scales up.
With its expansion plans, Guesture is betting big on the growing market for co-living. Pramod believes the market size is huge and by 2020, 5.6 crore people will be urban, upper middle class citizens under the age of 35, making them prospective customers.
"Till now, the focus was on getting the business model and team in place. From now, we will be active on social media to reach out to potential residents as the digital space is important," he says.