Online home rental marketplace NestAway Technologies on Thursday said it is restructuring itself by accommodating a franchise business model, in order to expand to smaller cities and towns in India.
The Goldman Sachs-backed company, with over 60,000 homes across 16 cities, said that the new strategy has been laid out to offset a reverse migration caused due to the Coronavirus outbreak in the country.
“Covid-19 has caused massive disruption in the home rental industry especially in cities as there has been massive 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 online reports. Job loss and salary cuts have also added to the cause,” the Bengaluru-based company said in a statement.
As part of the new model, independent property managers across tier-2 cities and tier-1 outskirts will have access to the same product, technology and know-how as the firm’s existing on-roll property managers, the statement added.
The pre-existing model, the company said, works best in busy pockets of the city and offers a full-stack service. Post Covid, customers want less rent and less services, it said, adding that a franchised version lets local entrepreneurs customize offerings as per customer needs.
“We need to be where tenants are. Pre-covid, tenant base was crowded in central business districts and few busy areas in tier-1 cities. We see a tectonic shift in consumer behavior 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,” Nestaway co-founder and CEO Amarendra Sahu, said.
The company claims to have received a three-fold surge in owner requests from smaller towns and cities since July. It is now confident of finding about 30% of its business from non-metros in the next two years, the statement said.
The period surrounding the Covid-19 related nationwide saw a variety of operational and fundraising activity among other players in the home rentals marketplace space.
In May, Gurugram-based Locon Solutions, which runs real estate platform Housing.com, raised $400,000 in a growth funding round from Singapore-based parent Elara Technologies. In April, Bengaluru-based Nobroker Technologies Solutions, which owns and operates real estate platform NoBroker, raised $30 million as part of a Series D funding round from returning investor General Atlantic.
In April, NoBroker’s security management solution for gated premises, NoBrokerHood, ventured into the bulk grocery procurement business for its residential communities, launching a grocery delivery service on its app to meet daily essentials needs. Late in August, NoBroker partnered with OYO Life to scale its co-living services.