When Deepak Anand was running HDFC Bank’s private equity fund to invest in the affordable real estate segment, he realized something was wrong.
“I researched the cohabitation market very thoroughly and realized that many players in this industry were more interested in increasing their revenue than improving the product,” says Deepak, co- founder and CEO of Housr.
Believing he had a lot more to offer in the co-living space, Deepak decided to quit his 15+ year corporate career and pursue entrepreneurship.
Together with Kalpesh Mehta, he founded Housr, a cohousing startup based in Gurugram in 2018.
Housr approached the cohabitation market a little differently, believing that a premium product would find takers.
“We understood that there was a market opportunity for a very standardized product in the high-end offering,” says Deepak, adding, “We weren’t interested in adding headboards to the beds.”
The team sought to develop secure accommodation with all modern conveniences and on the lines of a business class hotel. These include services such as enhanced security, full-time concierge, community building activities, and more.
Housr co-living space
The business started in the base town of Gurugram with 500 beds and a price of 1.5 times the accommodation, and to Housr’s pleasant surprise, the beds were fully occupied within 30 to 45 days of the launch. These are all new accommodations that have been provided by Housr.
“It gave us confidence that there was a market for a premium product offering,” says Deepak.
Between 2018 and 2020, Housr undertook an expansion campaign in the National Capital Region, Pune and Hyderabad. However, the startup had to put its plans on hold in 2020 amid the challenges presented by the COVID-19 pandemic. Luckily, they had ample capital as they had raised around $7.1 million in funding in December 2019 under its Series A.
As the real estate market was down during the outbreak, Housr saw an opportunity and bought homes from property developers at a 60% discount. It has also entered into a revenue sharing agreement with these developers.
According to Deepak, except for the three months when the outbreak peaked in the first two waves in 2020 and 2021, Housr has not experienced any major disruption to its business.
“We have multiplied the addition of new accommodations by 6 times during the entire period of COVID-19,” says Deepak.
Today, Housr has over 55 properties with 5,000 beds under its fold, and it recently added Bengaluru as a location following the acquisition of StayAbode for an undisclosed value which was announced in June this year.
Deepak calls the startup the “business class of co-living.” Cohabitation properties are priced between 26,000 and 45,000 rupees, according to Deepak, and the average price in Gurugram is 32,000 rupees.
The startup targets upwardly mobile millennials who have a monthly income of Rs 1 lakh and above.
As part of its business model, Housr enters into rental agreements with property developers where the latter make all the capital expenditure. It then pursues a standard 11-month lease with customers.
Deepak claims that their co-living properties have always been over 90% occupied and attributes this to the startup’s DNA as well as its premium product.
Three months ago, the co-living startup diversified its offerings with the launch of Housr Homes.
“Co-housing was focused on single professionals, but we understood there were small families that also needed a managed life,” says Deepak.
Housr Homes goes beyond serviced apartments with 1BHK, 2BHK and 3BHK spaces and has all the modern conveniences akin to a typical five-star hotel. A 2BHK accommodation offered by the startup in Gurugram costs between Rs 70,000 and Rs 100,000 per month.
Housr co-living recreation area
According to Deepak, Housr Homes has been 100% occupied since launch day and claims that its profitability is 2x that of its cohousing business.
This startup claims that 50% of its revenue comes from incoming inquiries and referrals. Only about 20% of its sales are made through outbound marketing activities.
The request is back
Deepak believes demand for co-housing has returned to pre-COVID-19 levels, however, the challenge remains on the supply side. Housr, on average, launches about seven to eight properties every month.
“There is a 100% rebound in the business and we have increased our prices by 25% in the last six months,” says Deepak.
According to a report by Cushman and Wakefield, the co-living market in India is expected to reach $13.92 billion by 2025. There are many players in this segment like Stanza Living and Zolo.
As part of its future plans, Housr aims to integrate approximately 12,000 to 14,000 beds into its portfolio by FY23. It plans to generate 70% of its revenue from the co-living segment and the rest from Housr Homes.
According to Deepak, Housr’s operations are profitable at the unit level with healthy double-digit margins.
He adds that although the startup is largely focused on metropolitan cities, it will also assess possible entry into places such as Chandigarh, Lucknow, etc.
Housr is looking to raise its next round of funding which will be used primarily for its expansion business.