Co-living segment yields to stabilize, asset appreciation to push IRR, student segment largely unaffected by Covid

Co-living segment should still be a good game for the operators because lot of supply is getting added, says Jitendra Jagadev, Co-Founder, Nestaway Technologies.

“A lot of players were expecting 8 to 10% returns, which is phenomenally high because the residential market is having a yield of 2 to 3%.  so those will stabilize”, Jagadev. He was speaking at Realty Webseries, a Realty & More and ICCPL initiative. The topic of the eighth episode of the series was “Co-living market Post Covid”.

Speaking at the Webinar, Ajay Sharma, MD, Valuation Services, Colliers International India said that in case of any commercial developer, the deals involve projections of the yield on the commercial premises plus the asset appreciation. “It is the same concept which is happening here also, so the asset appreciation part will probably push the IRR significantly higher for keeping the interest of the investors in the company”, said Sharma.

On the Co-living market, Mani Rangrajan, Group COO, Housing.com, Proptiger.com, Makaan.com said there have been quite a bit of discounting that is happening amongst the co-living operators. “I wouldn’t say that the discount is like 30 to 40 per cent or around that range but we have seen that some operators have discounted 10 to 20 per cent”,said Mani. Operators in the students’ segment said that the months of for April and May were cash neutral.

“I think that’s probably the best way to summarize the impact of the last few months”, said Co-Founder of Your-Space, Shubha Lal. She further added that June is something which they anyway budget for, as colleges are shut for one month in June and the students go back. “I think for us the bigger question now is when do we expect colleges to reopen so students can start coming back we have already started getting an advance booking for next session”, added Lal.

In agreement, Uday Lakkar, Founder & CEO, CoHo.in too said that students’ segment have largely been cash neutral. Though, Lakkar added that in his case there is a slight difference as they operate on revenue share contract with their asset owners and over three-fourth of their portfolio is under revenue share. “So our business model has been constructed in a manner, which moves with the ups and downs of the economy. So to that extent it’s slightly hedged”, said Lakkar.

Another panelist at the event, says Ankit Gupta, COO, Frontier Business, OYO said he is a staunch believer that co- living is a huge market for corporates and has more potential than the serviced apartment segment. “It is a good balance of where you get the comfort of all the services directly versus in a serviced apartment where you are supposed to manage all these things yourself”, said Gupta.