India's Rental Market Is Leaping but Not without Odds
One can hardly contest the intense love we Indians have for real estate which,if anything, has grown to be more intense in the past two decades-easy availability of housing finance did play a significant role in that. This has resulted in more and more people investing in property over the past decade. Resultantly, only 28 per cent of our population lives in rented homes today. This is a steep decline from what it used to be in 1961 when 54 percent per cent of people lived in rented accommodations. However, it would be a mistake to tag this reduction in numbers significant if we consider the enormous rise in population numbers since.
On the other hand, there are 11 million vacant homes and 0.8 million unsold homes in the country as per Census 2011. Still,the urban housing shortage is pegged at 19 million.
These numbers indicate towards the complexities in Indian's rental real estate faces today. As a result of which, the country’s relatively young renters - 65 per cent of Indians today are not more than 35 years old — face several challenges in finding suitable rented accommodation.
As it strives to become more organised, our rental real estate market will have to depend a great deal on technology, which is already changing the way homes are bought, sold and rented in the country.
One-third of our population is keen on renting given that property costs are high and a majority is turning to online mediums to find their homes, just like in the West. Our problems are not very different, but else where, technology adoption is becoming a norm.
Walking the tech-talk
A joint study by Housing.com and Makaan.com shows the highest number of searches for rental homes came from those who are between 18 and 34 of age. By 2020, the average age of Indians would be 29 years, and the tenants in this young country will need additional help from digital mediums to serve them better. It would be a mistake to assume market players are unaware of the fact and are not doing their best to cater to this segment. Most real estate portals have been out there, doing their best. What they now have to do is to work towards minimising the difficulty young tenants face in finding the right property
"The West is experimenting with Natural Language Processing or NLP technology to help prospective renters track reviews for their research that would otherwise go unread"
At Makaan.com, we tried to address this issue that tenants face owing to the fragmented market. We launched mProfile, a unique feature that offers a more personalised experience to landlords, tenants as well as brokers. For example, if a landlady decides to have a certain preference, that she would lease her home only to families or single working professionals or a group of students, she can tick these boxes when she lists her property. Similarly, if a bachelor is looking out for rental accommodation, he can be connected to those who do not mind letting their home to bachelors. This significantly reduces the hassle of having to go through a bulk of properties only to find out you were only shooting in the dark.
mProfile also helps one understand whether a prospective tenant is willing to stay for a long or short term. Based on this, a landlord can decide whether it is acceptable to him. We understand that while an owner or tenant logs on to makaan.com, they are looking at the ease of arriving at their choicest property option. mProfile is customisation at its very best. It is targeted at the millennial, who are looking at one-click solutions. The two-way flow of data helps property agents to understand the demand and supply accordingly, too.
Clicking their way to a perfect rented accommodation is not the only thing we as a market player could do for tenants. There are so many other areas where they need our help. Many issues continue to upset the convenience factor for prospective tenants. These are the areas that provide market players with great opportunities, too.
One of the benefits of choosing to stay on rent is being able to avoid hassles. However, the difficulty millennial face in creating rent agreements and renewing them could often mar the joys of that come along with rental housing. Recently, the Noida Authority announced tenants in the city had only one month’s time to register their rent agreements or face action. Imagine the plight of those tenants who are not living in the city currently and the trouble they might have faced! Here, some companies have taken the lead to help tenants make the rent agreements online. However, these are not widely used. This is a field of opportunity for startups.
Similarly, in big cities security deposit becomes an issue. You may like to live in a certain residential society, but you find out that the security deposit is much higher than you can afford. For youngsters into their first jobs, this is particularly difficult. Now, there are startups rolling out short-term loans for rent deposit. Again, these start-ups have yet to gain popularity they deserve.
There are issues concerning unverified tenants as well. In an unfortunate moment, a landlord may be fall victim to an unscrupulous tenant. Instances like these have often led to investors locking up their second property and not renting it for fear of passing it on to wrong hands. In some other cases, the rental yield may be as low 1-2 per cent. This partially contributes to the fact why our urban housing shortage may be an artificial shortage. The rental market has not created much merit.
Not been there! Not done that!
Technological advances are helping the rental market in so many other ways, too. The West is experimenting with Natural Language Processing or NLP technology to help prospective renters track reviews for their research that would otherwise go unread. Streamlining payments, which are often stuck in the pre internet era, is also a necessity today. The sector should not stand to lose because payments get caught up or frozen. There are also discussions about whether real estate is ready for blockchain.
Only future will tell how effectively we are able to exploit the opportunity that lies ahead of us.