In an exclusive interview series with ET Edge Insights, we are privileged to host Jitendra Jagadev, the founder and CEO of Nestaway. discussing the evolution of Proptech or property technology in the Indian rental market. Nestaway’s innovative approach, akin to Airbnb, is transforming the rental process through digitalisation and technology, addressing affordability and inclusivity challenges. The company’s growth plans include leveraging predictive tools like locality to ensure affordability and expanding its presence to smaller cities.
Edited excerpts from the interview
How is the integration of Proptech and various technologies within the rental market being perceived in India, considering it is a relatively new development in the country?
Interestingly, on a global scale, established organisations such as Nestaway have successfully positioned themselves, benefitting from their extended tenure in the market. Similarly, comparable firms such as QuintoAndar in Brazil and Zee Rooms in China, have achieved noteworthy success and operational scale within their respective domains. Though India’s Proptech and rental business is still in its early phases, there’s a rising trend in people choosing to rent homes.
In India’s top eight cities, we have a whopping 2.2 crore renters, with 1.6 crore in traditional setups and 40 lakh in furnished spaces like PGs and co-living. Among these, 20 lakh are students, creating three distinct rental categories, totalling around 2.2 crore. This demographic segmentation is anticipated to be significantly influenced by the prevalence of the Internet, with approximately 30% concentrated in major metropolitan areas. This is primarily attributed to the substantial influx of individuals migrating towards these prominent urban centres.
The Proptech rental platforms have played a pivotal role in organising what was once a largely unstructured sector. Through these platforms, individuals can easily book and set up their homes using a mobile app, allowing them to move in with minimal belongings for durations ranging from a month to a year. This technology has significantly streamlined the experience for immigrants in new cities, making the transition much smoother and more efficient.
Is there a strategy or a process you put in place to ensure that this process, which you just explained; how does this go about?
It is a two-way marketplace. Owners go to the Nestaway website, enter all the house information, and then publish it. Once it is live, potential tenants can search for it on the website and choose whichever house they like the best and which suits their budget and location. Everything is digitalised and the booking process is online. Since KYC is digitalised, an OTP is used to verify all KYC information, etc. Everything is done automatically through technology, including agreement generation. The entire booking process is smooth, allowing tenants to move in quickly.
A checklist is provided that serves as an inventory of the items within the home, documenting their condition. When a tenant moves out, they also receive a status report. This entire process is designed to benefit individuals seeking to rent a house. Many property owners with multiple houses to manage find it remarkably convenient. Once they entrust their property to Nestaway, they can essentially forget about it while continuing to receive monthly rent for maintenance. This arrangement makes it effortless for property owners to handle their real estate investments. So it is like a marriage between both parties, and it is as seamless as possible from our side.
How do you see the evolution of Proptech in the Indian market over the next 5 to 10 years?
What we are witnessing is a notable evolution in global markets, particularly in major cities. Over the past year, rental prices have surged by 40% in Bangalore, 25%-30% in Mumbai, and 25%-40% in Seattle. This surge is indicative of a significant trend driven by the migration towards higher density and sought-after localities within cities. The housing landscape is transforming, with traditional homes giving way to more compact multi-floor residences, aimed at affordability and independence. As a result, property values are soaring, leading to a surge in the demand for managed living solutions, a phenomenon more commonly observed in developed economies like Singapore and New York.
Proptech companies are poised to play a pivotal role in addressing affordability concerns and providing tailored solutions. Beyond financial considerations, there is a crucial aspect of inclusivity that needs attention. The influx of individuals from diverse backgrounds, encompassing various religions, languages, and lifestyles, requires a more equitable distribution of housing opportunities
At present, our primary focus revolves around collaborating with a network of over 100,000 property owners throughout India. Operating at a significant scale, we have successfully provided homes to more than 200,000 individuals in the country. Our commitment extends to fostering an inclusive environment, exemplified by our efforts to combat discrimination and bias against marginalised groups, including transgenders and the LGBTQ+ community, particularly in the Mumbai market. Our goal is to create an environment where newcomers to a city, regardless of their diverse dreams and aspirations, can seamlessly integrate and achieve their fullest potential. In addressing these challenges, we have embarked on a journey to facilitate a more harmonious and managed life for all.
Are local brokers considered competitors, and does Nestaway have any plans or intentions to integrate or absorb them into its business model?
We operate on a smaller scale, engaging with a diverse workforce of over 2000 individuals throughout India. Our team comprises retired postmen, housewives, and others seeking productive opportunities during their idle time. These individuals possess intimate knowledge of their local communities and serve as valuable connectors between potential tenants and property owners.
Unlike traditional large-scale brokers, we’ve strategically focused on collaborating with existing brokers, recognising their inherent understanding of market dynamics and demand. Additionally, we have proactively created opportunities for individuals with available free time, identifying them as ideal candidates to become effective brokers. By leveraging their insights gained from interacting with both landlords and tenants, these local experts play a pivotal role in facilitating successful transactions.
Our approach is centred on empowering individuals to become proficient brokers, equipping them to address the diverse needs of our clientele. Today, we take pride in our extensive network of brokers across India, built on the foundation of mutual collaboration and shared expertise.
What are your growth plans in the current future or anything that particularly needs to be looked at to level up?
One of the things we recognised was the affordability aspect. Many individuals find themselves excluded from desirable locations due to escalating rents, presenting a significant challenge. Recognizing this, we’ve integrated technology into our approach, placing a particular emphasis on the concept of “locality.”
“Locality” serves as a research tool exclusively, predicting the rent for a specific location or apartment and projecting rent changes over the next year. Leveraging this technology, we have successfully forged partnerships with developers to construct the appropriate supply. This strategic approach aims to provide an affordability solution that incentivises our growth.
We have experienced robust growth over the last three years, and our goal is to maintain this momentum while focusing on the living component. We intend to expand our reach to lesser cities, even though we have admittedly focussed on the five largest. We have taken that concept to 14 locations, and we are seeing considerable growth in those areas. Moving forward, rental real estate will continue to be an important component of the public, and it will be a primary priority for us.
