Home rental company Nestaway Technologies on Thursday announced restructuring of its business model with the launch of a partnership /franchising model. This move will help in expanding to smaller cities and towns in response to the reverse migration caused due to the ongoing global pandemic, the company said in a statement.
COVID-19 has caused massive disruption in the home rental industry especially in cities, as there has been reverse migration of youth to their hometowns (estimated to be as high as 50% in cities like Bengaluru, with over 30% of homes in the city now lying vacant as per reports). Job loss /salary cuts have made the situation worse. Nestaway, in response to this changing dynamic in the market, has decided to extend its services to manage rental homes of owners in Tier-2 cities and outskirts of Tier-1 cities in a franchise model to cater to the growing needs of rentals in these locations. As part of this new model, the independent property managers would have access to the same product, technology and know-how as the existing on-roll property managers.
Based on its internal migration and tenant exit data, Nestaway has seen tenant churn in line with the migration data. Over 10,000 people have vacated their rental homes in the last 3 months and have gone back to smaller cities /hometowns.
Since the start of July 2020, Nestaway says it has seen a 3X surge in owner requests from smaller towns and cities asking to manage their homes, which the company used to turn down earlier under serviceability grounds. With the changing market dynamics, Nestaway will also be launching a product offering solely catering to this.
With the growing acceptance of buying services online, Nestaway is now looking at finding both owners and tenants beyond metros and doing at least 30% of its business from non-metros in the next 2 years.
Amarendra Sahu, Nestaway co-founder and CEO said, “We need to be where tenants are. Pre-covid, tenant base was crowded in central business districts and few busy areas in Tier I cities. We see a tectonic shift in consumer behaviour now. With over 85% of tenants with us belonging to knowledge jobs, they now prefer far off locations and nearby smaller cities as the rents are cheaper and they do not have to commute to work daily. While our existing model works best in busy pockets of the city and offers a full-stack service to make living easier, post Covid, customers want less rent and less services. That is why we are taking the decision to add a franchised version of our services so that local entrepreneurs can customise it as per the need of customers in their geographies. That way the service becomes available to more people and more jobs also get created.”