COVID-19 hit the startup ecosystem hard, with anything related to leisure, travel, and tourism taking the biggest hit.
The coliving sector – booming till then – was forced to put its house in order as startups struggled with rising vacancies due to reverse migration, tenants’ ability to pay rent, and other reasons.
The market size dropped significantly as did investor interest. Bengaluru-based Zolo Stay and Delhi-based Stanza Living were probably the only two startups that were able to raise funds in 2020. A bunch of others, running at almost full occupancy till then and including Coho, Ziffy Homes, and Nest Away, had to reduce their property size, team size, or completely shut down.
But the vaccine rollout and drop in cases across India have led to a slow recovery in the coliving segment. And Bharat Agarwal is banking on this trend to help grow his coliving startup.
How it started
Based in Delhi, Bharat moved to Mumbai in 2014 to pursue a degree in law. He failed to find good accommodation as a paying guest and could not consider renting a flat as the rents in India’s financial capital were astronomical.
“I and a few of my friends just wanted a place where we had good food, an area to relax, and where we were surrounded by people we could become friends with,” Bharat tells YS.
He and a few friends soon came together, rented an apartment in Mumbai, and converted it into a shared living space. They named it CollegeStay. “In 2014, CollegeStay was born of our own needs. We wanted a good place to live, which we found, and we were also able to make some extra pocket money,” Bharat says.
Bharat Agarwal (left) with his brother and one of the co-founders, Siddharth Agarwal.
The money saved from the first flat led the team to take up the entire floor, and finally the whole building. Bharat realised the need and the opportunity in the coliving business and decided to start Hive Hostels in 2018.
With six friends and an investment of Rs 2 lakh, CollegeStay was soon running coliving spaces in three buildings across Mumbai. Every property had an in-house chef, who changed the menu every week, in-door gaming and chilling areas, comfortable rooms, gym, study area, movie nights over the weekends, and offered a rooftop terrace.
The firm now operates at close to 30 percent margins; the rest goes into maintenance and paying staff salaries. Currently, there are at least 60 people working across the senior management team and property maintenance staff.
Rooms offer single-occupancy, and double and triple-sharing options. “Before the pandemic, many people would prefer triple sharing because the rent is cheaper,” Bharat says.
Hive Hostels charged between Rs 30,000 and Rs 50,000. The three properties, with 120 beds, were running at full capacity until April 2020.
“People were staying with us for some time but slowly started moving out,” Bharat says. The coliving startup then started working towards reworking their rent agreements and retaining cash. But it had to shut down two of the three properties.
“We were just waiting out this time and holding on to one property because this was only going to be a phase. It was easier for us because we were not holding on to too many properties and were able to save some cash,” Bharat says.
Rent rates were also reduced up to Rs 10,000 from Rs 30,000 earlier. This helped the startup tide over a period that translated into shutdown for many startups.
Market and the future
According to recent media reports, the Indian coliving market is expected to become a Rs 2 trillion market by 2023 in the top nine cities, driven by demand from young professionals and students.
Credit: YS Design
Hive Hostels at present has four properties across Mumbai, running at full capacity, and properties in Delhi, Noida, and Dehradun. The coliving startup has 1,500 beds and aims to expand to 20,000 beds. “We aim to have more than 20 properties in the next one year.”
Apart from expansion in India, Hive Hostels is also eyeing Dublin, Ireland, and Singapore. “There is a growing student population in Ireland and they also face similar problems. Now is a good time to expand there,” Bharat says.
The founders aim to raise a funding round in the next few weeks.
As of now, the firm competes with well-funded players such as Zolo Stay and Stanza Living. Ziffy Rooms is still operating despite a reduced team size.
With recent fundraise of backpacking hostel GoStops, revenge travelling, and students slowly returning to cities, investors and founders are also getting optimistic about the coliving space.
And Hive Hostels aims to ride this growth.