Branded hostels until some time ago were an untapped segment of the Indian real estate market but with the recent branded hostels phenomenon, they have grown into ‘A home away from home’ for their users. This sector was a neglected asset class earlier but now with students and working professionals looking for an interim accommodation where they can avail all modern facilities, the segment has rose to demand. Many developers these days are coming up with hostels which give you excellent facilities and amenities.
Students and professionals have for long adjusted with mediocre rented accommodations or paying guests PG accommodation pads. In these facilities, the security is usually not up to the mark and only bare minimum facilities are available for the users. Some students live in hostels provided by the educational institutes where in the name of facilities you have only internet, food and laundry.
However, today’s market trend is hospitality and real estate rolled into one. The demand for good, clean, safe and comfortable accommodation is the need of the hour and in this sector the demand exceeds the supply. Globally, student housing and hostels for working professionals is a $200 asset class, according to an Eduvisor report. Thus the segment has attracted capital from pension funds, private equity funds and sovereign equity funds which are on the look-out for a steady flow of long term returns.
In India, this concept is still in its embryonic stage where mostly the players are few and most of them are not organized—like landlords who let out the property to 200-300 students. This market needs to be groomed so that it can shape up into a profitable venture. People looking for hostels now tend to see the brand name and the facilities that come with it.
A survey shows that at least a dozen chains of branded hostels are coming up in India in the next five years, mainly in clusters near the educational institutes like Kota in Rajasthan or in places where there is entry-level working professionals like Gurgaon, Hyderabad, Bengaluru and Pune. The need for housing does not stop after education; many young professionals end up renting and sharing their accommodation and it turns out to be just like a student’s PG with the same problems.
Aarusha is one of the hostel brands’ which provides accommodation for students and working professionals. It has hostels in Pune, Bengaluru, Hyderabad and Chennai. Another such brand is Zolo Stays in Pune and Bengaluru. This is a fast growing sector where the returns are good because everyone, even if they are not living at home, needs a good and comfortable place to stay and branded hostels can build trust with their consumers and thus, grow rapidly in this vast market segment.
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