India’s hostels for the upwardly mobile

Posted On Saturday, 25 February 2017 10:22

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IF SEVERAL hundred million Indians do migrate from the countryside to cities between now and 2050, as the UN expects, it will be a fiendishly busy few decades for Vivek Aher, who runs a low-cost hostel, one of five, on the outskirts of Pune, a well-off city three hours’ drive from Mumbai. A fair few of the new arrivals will have their first experience of urban living bunking in one of the hostels’ 1,350 beds. Should recent experience be anything to go by, most of the new arrivals will test Mr Aher’s patience by tacking posters on his hostel’s walls, or endlessly complaining about the Wi-Fi.

India has two main drags on economic growth. One is the difficulty of finding a job, especially in the places people live. The other is a chronic shortage of cheap housing. Aarusha Homes, Mr Aher’s employer, started in 2007 to help people seize economic opportunities far from home. Its rooms are basic and cheap. They include up to six beds, a bathroom for every three or four residents, some common areas and little else. Rent ranges between 3,500 and 10,000 rupees ($52-$149) a month including food.

Most of Aarusha’s tenants are young, many of them taking first steps into the middle-class as IT or business-processing outsourcing professionals. Paying up to six months’ deposit for a city flat is beyond their means, as is the down payment for a motorbike that would allow them to live far from their employer. Aarusha’s successful pitch is that its hostels are safer than slums or informal “guest houses”, especially for women. It now has 4,300 beds in 1,300 rooms spread out over 20 hostels in four cities. The typical tenant stays for six months. Satyanarayana Vejella, the firm’s co-founder, plans to raise another $10m to increase capacity by 12,000 beds in nearly 70 new hostels, all in the next two years. Operating-profit margins are in the mid-teens.

News source: The Economist

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