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CASE STUDY
Industry

Co-living
/Co-Living/

NOUN
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 difficulty 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 affair. 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.