Today, economic uncertainty is at its peak and consumer sentiment has taken a drubbing
A dip in job opportunities and potential restrictions on foreign education avenues have pushed the case for an uptick in domestic migration for higher education
Managed accommodation operators have redefined rental living over the last 2-3 years
The pandemic has impacted businesses across the board upending years of theses on which several sectors were founded. On one hand, companies are recalibrating processes to create recession-proof tweaks to businesses. On the other hand, with a potentially altered consumption behaviour on the horizon, there is pressure to not only adapt to stay relevant but also evolve with changes that are here to stay.
Against this backdrop, rental housing’s budding poster child – managed accommodation – finds itself in a unique position to seize the day.
Challenges Faced By The Managed Accommodation Sector
Managed accommodation has been viewed as a high-rise sector over the last few years. Against the backdrop of the pandemic and the resulting lockdowns, however, there has been an abrupt slowdown in student and white-collar migration, somewhat impacting immediate demand and companies have had to recalibrate plans for the rest of the year.
Additionally, operators have focused on contingency measures – reworking arrangements with business partners, tightening operational costs, and adopting high hygiene and safety measures while continuing to service existing customers.
Are these temporary challenges? Perhaps. Yet, they have pushed for a fine-tuning of business models and the establishment of better business practices, allowing well-capitalized market leaders to shape faster recovery paths. Simultaneously, the pandemic has created an opportunity for professionally managed accommodation concepts to be positioned as the future of the real estate, based on their adaptability, counter-cyclicality and resilience.
From using technology to building contactless living solutions to agilely developing sustainable service ecosystems – never before has so strong a case been created for mass-consumer movement away from unorganized, local PGs and renting options.
The Rainbow After The Storm
While operators must focus on getting their house in order, there are some trends that will create strong tailwinds for high-quality operators with strong balance sheets:
Budget-Constrained Consumption Behaviour
Today, economic uncertainty is at its peak and consumer sentiment has taken a drubbing. Consumers are recalibrating home/personal budgets and curtailing discretionary spends. There are also signs that big-ticket decisions like property purchases and/or mortgage applications will be deferred by consumers. This will create greater renting propensity for apartments as well as managed accommodation.
Also, nightmarish memories of the sudden disruption of services from the lock-down announcements in March is creating a greater appreciation for an all-inclusive, economical, branded managed accommodation solution that prioritizes safety and hygiene while ensuring uninterrupted and reliable service support.
Increased Demand For Higher Education And Upskilling
A dip in job opportunities and potential restrictions on foreign education avenues have pushed the case for an uptick in domestic migration for higher education. Additionally, the initial euphoria around distance learning and online higher education as this new game-changing elixir are slowly being called out for what it truly is – definitely classist, potentially sexist, intellectually bereft and completely unwholesome. With colleges set to reopen sometime this year, consumer demand for safer, more hygienic and hassle-free accommodation solutions will get a boost.
Additionally, rising unemployment in Tier 2/3 markets triggered by this deep economic crisis and the relatively quicker return of white-collared job opportunities in Tier 1 markets will drive increased migration into larger economic centres. Similar trends were visible in the Western economies in 2008-09 when there was an outward migration away from large economic metropolises in the initial days of the Global Financial Crisis, only for the trend to strongly reverse in the following months.
Continued Requirement For A Robust Remote Work/Remote Study Infrastructure
As offices resume phase-wise operations and educational institutions ponder social distancing norms, young millennials are gearing for a change in the status quo. Corporates and colleges will have to likely embrace a hybrid model based on flexible, rotational on-site schedules which will require remote study/work environments to complement and deliver high productivity at par with offices and colleges.
The ensuing need will be that of a fully enabled, dependable home-support system (including power back-ups, stable, enterprise-grade internet connectivity, timely and healthy meals, the privacy of space etc) which is essential to this new lifestyle.
Need For Household Support And Risk Of Dependence On External Ecosystem
While people are learning to adjust, normal migrant lifestyles of individuals and unit families have been historically hinged on outsourcing household tasks to a support ecosystem (cooks, house-helps, delivery persons etc), while they pursue their goals. Post this debilitating pandemic caused by an invisible virus, there is a rising wariness of dependency on this ecosystem which typically exists as shared resources among multiple localities and who themselves reside in crowded settlements, thereby increasing vulnerability to infection.
Managed accommodation players have not only maintained uninterrupted service delivery to consumers, their in-house operating teams who are trained and equipped to maintain high levels of sanitation have also significantly reduced probability of infection exposure since they are dedicated resources.
The Future Of Managed Living
Managed accommodation operators have redefined rental living over the last 2-3 years. Living in rental accommodation for young, migrant millennials no longer needs to be a compromise on lifestyle quality or an adjustment to unorganized options that don’t adapt to consumer needs. Managed accommodation providers have organized and professionalized this experience and offer better value.
In light of the pandemic, they have also set new benchmarks in health and hygiene standards that are sustainable and scalable. Driven by consumer demand for convenience, access and quality they are expected to be the preferred choice for India’s discerning millennial and Gen Z population. Managed accommodation will hence be a new chapter in the real estate novella, and the fittest and best-managed operators will create outsized outcomes in the post Covid world.