All You Needed To Know About The Modern Day Co-Living Space Boom
Several startups have emerged in the co-living space market, offering shared accommodations to those looking to rent apartments at the click of a button
When you’re searching for an apartment to rent, the first rule is: find a broker. Unless the planets align such that your favourite uncle gives you a sweet deal on a flat that’s just lying around, you need the middleman. And if this writer’s own experiences across a metro and a notso-metro are anything to go by, most middlemen tend to be rather incompetent. The real estate – and particularly rental – market is fragmented and unorganised, and you bear the full brunt of it when you’re looking for a place to hang your hat – and that’s just the beginning of the problems you’re likely to encounter.
Next come the uncomfortable questions. Single? Married? Religion? Non-vegetarian? Pets? By the time you’ve gone through the filters via said incompetent, you end up at a flat and the keys are nowhere in sight, or the owner doesn’t like your eating/praying/ loving habits. The final nail in the coffin – and the reason why so many rental management/coliving startups are based in Bengaluru – is commute time. By the time you’ve found and jumped through all the hoops you need to in order to lay your cartons down, you’ve just about blown your budget, or are too far away from your workplace for it to be practical. Lots of pain points to address, a perpetual market and room to scale – this about describes a whole slew of startups that intend to make living on rent easy, transparent and cost-effective.
COMMON ORIGINS AND SOLUTIONS
Bengaluru seems to be a hotbed for the co-living space, and I heard very similar origin stories. Typically, they involve a founder or her relative moving to a new city, trying to find a place to live and being frustrated by the process. Renting a place to stay is unnecessarily complicated, and while it’s longer-term than a hotel, it’s still relatively temporary. It’s the crux of a common set of problems that both tenants and homeowners grapple with – security, transparency, cost, occupancy, services and logistics.
Rental management startups are making each of these checklist items as seamless as possible. They take care of the documentation (this alone would cost more than a typical onboarding fee in most metros), ensure a standard level of product and service and eliminate the grating items such as maintenance services, house cleaning etc. They’re like service apartments, but at rental costs.
HOW DOES IT WORK?
Think of these spaces as long-term AirBNBs with room-mates, if you will. That’s how Ismail Khan, SVP-Operations, NestAway Technologies, describes it. NestAway is a “managed home rental network”. Just like with an AirBNB, you don’t need to jump through too many hoops, or provide DNA samples, to lock your stay down. NestAway eliminates what Khan describes as the “trust deficit” between homeowners and tenants, with a layer of tech and services. What it boils down to is that there’s an app/ website, you find what you’re looking for, schedule a visit and complete all the formalities online, with as little as two months rent as security deposit, and a small on-boarding fee. There’s no brokerage, though the services you’d typically expect from a broker are delivered. At the homeowner’s end, they’re guaranteed rent, due diligence and a properly maintained home, which are key. This about sums up the “managed rental” market, with a whole gaggle of competitors vying for space, almost all of them with origins or presence in Bengaluru.
NestAway co-founders – Deepak Dhar, Amarendra Sahu, Jitendra Jagadev, Smruti Parida
NestAway is a big player, with 55,000 tenants across 25,000 homes in India. All their co-founders feature on some 40 under 40 list, and have a stated goal of eliminating discrimination and making affordable rental housing accessible. Clearly, their investors are convinced, with marquee names such as Goldman Sachs, Ratan Tata, UCRNT, IDG India and Tiger Global chipping in $94.2 milion thus far. In some ways, NestAway is taking the place of the broker, by adding a layer of services and some level of trust. But brokers haven’t entirely been eliminated in the model – they’ve become “affiliate partners” and execute specific tasks, but as far as the tenant is concerned, they just deal with an app.
At the opposite end of the unicorn scale, there’s SimplyGuest, also Bengaluru-based, which reflects the “trust deficit” problem. Mayank Pokharna, one of the co-founders, recounts a transaction where an owner preferred to deal with SimplyGuest at a lower rental, simply due to the comfort factor. He agrees that having an organised layer between the tenant and owner smoothes things out considerably. SimplyGuest is tiny in comparison to NestAway – 250 guests, 50 homeowners and bootstrapped, and with no 40 under 40 lists mentioned in our interactions. The company has a strong focus on co-living for young professionals, and in educating tenants toward harmonious living. They’ve come up with a unique solution to tackle delicate conversations – they commissioned caricatures from renowned cartoonist Ponappa.
SimplyGuest co-founders – Mayank Pokharna, Ambareesha AV, Subbu Athikunte
In line with their focus, SimplyGuest decided to tackle three key areas for urban migrants: lodging, commuting and food. By making available properties that are close to high-tech hubs, they eliminate long commutes, even providing bicycles at a small fee. They also have an internal food delivery service – started by a tenant, no less – that sorts out food, if you’re unmotivated, or just need to get as much sleep as possible. Pokharna sees it as the beginning of a platform, one that can plug in other related services in the future. Simplyguest takes “living-as-a-service” quite seriously. Once services are decided, everything is billed once a month in one invoice, per tenant (shared, or independent housing). Even bill splits for other expenses can be managed within their app, and settled in the next billing cycle; this can include food bills via the internal service. SimplyGuest goes as far as to custom-design their own furniture, to be functional and bomb-proof. Well, almost.
For shared accommodations, these platforms are even more efficient. One doesn’t need to look for roommates, there’s a predictable cost structure and rules in the agreement ensure that expectations are set. Targeted at young professionals, these platforms also eliminate the prejudice against single folk. “The owner agrees that he/she will not discriminate against any prospective licensee…on the basis of caste, creed, colour, religion or food preferences.” So goes the wording in NestAway’s agreement with the property owner. “We always stood our ground in situations like these. We have never compromised on our no discrimination policy,” explains Khan.
He goes on to highlight stories and anecdotes – those of tenants driving owners to hospital late at night, or of owners waiving rent for tenants who’ve been laid off. Positive tales, in general, but it doesn’t take much imagination to think up points for friction. For instance, SimplyGuest has a policy against mixed-gender sleepovers. Same sex is fine (which seems rather convenient for those born that way) but it’s more of a guideline. Pokharna recounts an instance where a lady tenant did not inform her housemate of a male overnight guest. The housemate was horrified to find a strange man on the couch at 2am. The rules are to avoid instances such as these, but generally serve as a reminder to be considerate, and perhaps as a tie-breaker.
And when it’s time to settle down with a partner, the same platforms offer family housing with similar benefits.
While urban migrants will drive the volumes business for these startups, Yash Kankaria decided to focus on the digital nomad, very soon after completing his engineering degree. Kankaria is co-founder of Bootstart Colive, a co-living and co-working space in idyllic Goa. The property is a three-minute drive from popular beaches, but it is designed to feel offgrid, nestled in verdant greenery. Kankaria has a family investment in a hostel network, and his business development role there gave him intimate knowledge of what young people are looking for in a living/working space that doesn’t necessarily need to be in an urban centre. The Goa property is his experiment – now 20 months old – though Bootstart does have a presence in 11 locations and four cities.
Why Goa, then? Answers are easily forthcoming from anyone who doesn’t need to stick to a 9-5 routine – nice weather, food, beauty, pace. “People are bored, they need change. Our tenants come from IT, startups, are artists, writers and festival attendees.” Bootstart Colive’s Goa property currently comprises 46 beds, including two private rooms and the rest in a dorm-style format. A mix of local and expat tenants use the facility, and there’s a 20-seater coworking space and 50-seater cafe/bar on the premises. “I always wanted to start something where one could stay, work, eat, drink and chill. My experience with the hostel business made it easy to execute in Goa,” Kankaria explains.
THE WAY FORWARD
India’s tenancy laws being what they are, the common middleman business model is the way to go for the foreseeable future. It’s not about disruption, but efficiencies. Already, the promise is delivering and creating customers at both ends of the rental transaction. Ultimate efficiencies could be achieved by custombuilding rental properties to maximise use of space and services, but that’s very capital intensive. Pokharna’s SimplyGuest is instead pushing builders to create more 1BHK/ Studio format apartments for private housing, without restrictions, while maximising yield per square foot. Think hotel-style living, but much longerterm, and much more affordable.
THE TENANT’S VIEW
NestAway tenant, Bengaluru
When Viswanathan needed to move from the centre of the city to a location closer to her workplace, she used NestAway and is quite satisfied. To begin with, she has a flatmate and saves 20 per cent on her old accommodation, she figures. The process itself was far easier than going the traditional route. “I just paid the security deposit, uploaded an ID proof, the agreement was online, and I was handed over a physical copy, given new utensils, linens, mattresses etc. It was like checking into a hotel,” she explains. Since she moved into her NestAway apartment, three more friends have signed on. One has moved from Chennai with her husband, opting for a family home instead of shared accommodations.
SimplyGuest tenant, Bengaluru
Singhal moved from Jaipur to Bengaluru in April, 2016. He heard of SimplyGuest through friends who were already living in their properties. He hasn’t moved since. Transparency of process is what impressed Singhal the most, in using the platform. “The benefits are clear. There’s no brokerage. When I moved in I got a booking email, the minimum lock-in period is specified, as are the end of term charges”. Singhal was looking at between 4-5 months rent as security deposit, which came down to two months with SimplyGuest. Additionally, his monthly rent has stayed static for nearly three years. Living in a furnished (albeit shared) space for roughly the same cost as an unfurnished independent house made sense to Singhal, for whom the whole living-asa-service concept seems ideal.