CASE STUDY

Industry
Co-living

Co-living is a modern form of housing where residents share living space

and a set of interests, values and/or intentions.
Nearly half of the country’s population, approximately 600 million
people, are under 25 years old. Of these, a large percentage is moving to
urban centres in search of jobs, better economic opportunities or for
pursuing higher education. This demographic of young
professionals/students moving to new cities face the obvious di iculty of
finding accommodation and in the process end up spending hours and
hours looking for the perfect house to live in, within their budget, right
location and like minded people to share it with. Earlier, the options
were limited to PGs and shared flats only - each having its own
disadvantages in terms of time restrictions and being costly respectively.
It is this lack of ideal options in the traditional rental housing that co-
living is gaining traction.

As per a recently released report by JLL and FICCI, the shared rental
market consisted of 3.6 million beds with co-living penetration being
~2.5%. In 2023, these numbers are estimated to swell up to 5.7 million
beds with co-living’s penetration going up to 8.3%. Estimated to grow at
17% CAGR in next 5 years, co-living will be an INR 1 trillion market
opportunity by 2023.
GROWTH DRIVERS

The co-living space is growing at a fast pace because of the following

growth drivers:

1. Millennial Population and their Outlook on Home Ownership

Fueled by rapid urbanization, which is expected to increase to 40% by

2030 from ~30% in 2001, a large part of millennial population will keep
finding themselves looking for accommodation in a new city. Moreover,
millennial’s outlook on home ownership is vastly different from previous
generations.

While earlier generations moved to the peripheral areas to fulfil their

dreams of owning a home, the young population will not settle. While
choosing their accommodation, connectivity to their work environment,
security, neighbourhood amenities and a vibrant community are some of
the factors that influence their decision making process. In addition, a
migrant workforce will always lean towards rental space in light of the
vulnerability connected with the length of their stay and investment
cost. The result an expanded interest for rental accommodation.

2. Preference towards Fully Managed Homes

A typical millennial is always short of time and the sheer management of

a new house with the added responsibilities of running a household
independently bog them down. In the words of our CEO Rohit Kapoor,
“Today’s youth expects more than just the four walls of a room. People
desire a higher quality of hospitality with amenities and comforts that let
them get more out of life, to do what they are passionate about without
having to stress over everyday home maintenance issues.” This is where
co-living places come to the rescue - taking care of the basics and
helping residents feel secure and looked after.

3. Promise of a vibrant community

Today, millennials prefer investing in experiences and things that gratify

them. Finding like-minded people and building a tribe is one of the
critical factors that dominate most of their decisions, from their
workplace to who they live with. This is where co-living as a concept fits
in well and matches their priorities. Co-living is best experienced in the
mega-communities that combine state-of-the-art, super aggregated,
tech-enabled shared spaces for young working professionals and
students. Unlike other shared living arrangements, co-living encourages
social contact and community building. Curated events such as open
mics, cookout sessions, karaoke nights, and flea market for residents
encourages social interactions and cultivates a sense of belonging in
people opting for co-living places.
ABOUT OYO LIFE

Launched in October 2018, OYO LIFE offers fully-furnished, long-stay

rental solutions for young professionals and students. OYO’s deep
operational capabilities ensure superior customer satisfaction delivered
in aesthetically designed community spaces. Currently, OYO LIFE is
operating in 9 metro cities - Delhi, Noida, Gurgaon, Mumbai, Kolkata,
Bangalore, Pune, Chennai and Hyderabad.

Keeping in mind the needs of youth, OYO LIFE gives the freedom and
space they need and also eliminates the hassles of dealing with brokers,
brokerage, lock-in periods, houses with little or no amenities,
maintenance charges, housekeeping services, and security deposits,
which can be a costly a air. Also, there’s no lock-in period which ensures
no hassles in case of a transfer to a different city in three months or in
case of a job change.

Depending on the location, properties have the option of private rooms,

double occupancy, triple occupancy and quadruple occupancy. Each
property has an on-call building supervisor who stays in the property and
is responsible for the maintenance of the property. Modern and artsy
decor is another feature of the properties along with amenities like WiFi,
TV, DTH, washing machine, refrigerator, RO, AC, weekly housekeeping
etc.
The OYO LIFE proposition disrupts traditional rental housing by
simultaneously ensuring benefits for the asset owners (including higher
rental yields, hassle-free operations, transformation of the buildings
through design, increased asset liquidity), and for the customer
(providing fully-furnished, ready-to-move-in apartments, with zero
upfront investment, quality on-demand services, without the hassle of
brokerage). Within 11 months of launch, OYO LIFE is on track to be the
largest player in India and has grown to 700 buildings.

PROBLEM STATEMENT

The Indian co-living market represents a $50 billion long-term rental

opportunity in India. However, there is a severe shortage of quality
affordable housing in tier-I cities and tier-II cities. This is despite the fact
that millions of housing units are lying vacant across India. To tackle this
unique problem, co-living industry has boomed and has started turning
the unsold residential properties into fully-managed shared
accommodations equipped with a wide range of lifestyle amenities. The
primary choice consisting of PGs, shared flats and hostels has shifted to
fully furnished and fully managed properties and OYO LIFE has fast
become a leader in this space. However, propelling faster towards a
growth target of 10x in the next 1 year is the challenge as of now.

Broadly speaking, there are two target customer groups - professionals

and students. Both professional and student co-living spaces were
operated similarly, however, the student housing segment is now being
looked at differently due to difference in the customer decision making
journey. Parents have a big say when it comes to student housing, along
with an increased focus on safety, security and living standards.
Another way of profiling customers is through gender. While co-living
spaces solve accommodation issues for both men and women, the
proportion of women has stagnated around 30% of overall residents.
Female residents focus more on safety, security and personal comfort -
requiring a deep thought on what can be done to address these
concerns better. Geographically, OYO LIFE operates in 9 metro cities and
the company is considering moving to the next set of big cities.

The objective of The Catalyst is to understand this space and build a

strategy keeping in mind the overall target of achieving 10x growth:

1. How do we make OYO LIFE the 1st choice for

professionals/students/women migrating to a new city?The analysis
should include insights into how each segment chooses their
accommodation and barriers that stop them from choosing OYO
LIFE. What customer proposition will connect with them the most
and how do we communicate this? How should OYO LIFE think
about building Awareness and Consideration?

2. What's your one Big Business Idea which can help OYO LIFE grow at
an accelerated pace? It can be around new customer segments,
products, geographies, marketing campaign etc. While defining the
Big Business idea– call out the clear objective, idea, impact and
execution strategy.