Opportunity for the university to grow up

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As these student housing empires grow brick by brick, universities will play a key role. One of the key stakeholders in the student housing ecosystem, they have the potential to exist as either competition or partner. And if student housing companies can convince them to be the latter, it would provide a huge boost.

Student accommodation on the campus

The biggest land banks for potential student housing typically rest with universities, with many having full-fledged student accommodation on campus. All the startups quoted in this article believe universities should focus on their core competence—academics—and let student housing companies manage the accommodation for them. A win-win. Or so they would have you believe. And while some colleges are buying into this idea, not everyone is convinced.

A senior executive at Sonepat-based Ashoka University says the university considers accommodation an intrinsic part of its infrastructure. “Academics and infrastructure can’t be looked at in isolation,” she says. Ashoka University has a fully residential campus for 1,700 students and is building more hostels for its proposed expansion. Having premium hostel facilities on campus only adds to an institution’s draw and allows it to charge more.

The likes of Ashoka, though, are few and far between. The reality is that most hostels on Indian college campuses are a mess. Speak to any hosteller and issues of hygiene and security come to the fore. Though higher education regulator UGC (University Grants Commission) norms mandate a particular number of hostel beds for a new college, there are no rules on scaling this as colleges expand. This creates a huge problem—colleges increase courses, thus raising enrolments and boosting their revenues, but infrastructure can’t keep pace.

Bangalore-based Campusville has built its student housing business on university tie-ups. One of its major partners is Jain University. Campusville founder Saket Jalan feels that it is a much better model than a consumer-facing business since there’s more predictability in revenues.

Govenment-funded universities around

Thus far, though, government-funded universities are unwilling to come on board, perhaps due to the comparatively high fees charged by these startups. Gera and Dutta both claim that some of the private universities are more open to the idea. Dutta says some universities have shown interest in Stanza managing their campus hostels, and Stanza is seriously considering it. OxfordCaps, on the other hand, will be working with colleges such as Bengaluru’s IFIM and Ahmedabad University to manage their hostels.

For student housing startups looking to scale, this avenue will prove vital. However, even as they grow at a frenetic pace—Stanza went from 2,000 to 22,000 in just a year—they’ll need to maintain quality. Dutta understands this. He says Stanza could have easily grown to 40,000 beds this year, but it chose to focus on consumer experience first. Consequently, a large chunk of its funding has gone towards beefing up its services business and building out a tech platform.

Role of the real estate consultancy

The bait of co-living is also something these startups will do well to avoid. While the products are similar and it may drive greater occupancy, mixing the two would be a huge mistake. “Students and professionals are very different sets of people. You will end up spoiling consumer experience, and it has already happened in several cases”, says Aashish Agarwal, senior director at real estate consultancy firm Colliers International.

Both Stanza and OxfordCaps say that they don’t entertain professionals at their properties, and, given the situation at locations like Paris House, you could argue they have no need to either.

Both have aggressive expansion plans. Stanza wants to scale up to 1 lakh beds by 2021, OxfordCaps wants to get to 2 lakh by the same deadline. Stanza also wants to go international.

OxfordCaps’ Talreja says that the company has already entered Indonesia and Malaysia, other than Singapore. While the opportunity is a no-brainer, the viability of these startups’ dreams will be determined by how well they can manage both products and services.