OYO Marks its Entry in Rentals. Are Other Players Worried?
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
There was a time when you finding a new place for yourself meant taking several days off from work and making multiple rounds to the broker’s office. This was followed by going to multiple houses before you actually settle on one house that can be home.
Today, it’s a different story. All one needs to do is download an app and look at the various listings which can again be filtered by location, rent price, amenities etc. So, the advent of technology has changed the way we find a place to stay as well. Several start-ups have emerged in the sector which help people find homes, get in touch with brokers, rent home furnishings etc.
There is a growing number of Indian millennials who are moving away from their hometowns and are shifting to new cities for jobs and are thus, renting new homes. So, there lies a huge market opportunity in this sector. Sensing this opportunity, OYO Rooms has entered the segment. The company has now come up with Oyo Living as co-living rental spaces.
But the entry of OYO, a start-up that quickly rose to be one of the biggest in the hotel industry, with its established reach and favourability in the country, threatens the presence of the other players. Entrepreneur India takes a look at how the industry will grow and how the other players will be affected by OYO’s entry.
What OYO Plans to Do
OYO Living will host properties with more than 2000 beds in Noida, Gurgaon, Bangalore, and Pune. In an official statement about the new offering, Ritesh Agarwal, CEO & Founder, OYO Hotels & Homes said the move was planned to continue innovating and create new customer experiences. “OYO Living was conceptualized based on the feedback and demand from our valued customers and asset partners. We saw this as a huge opportunity and decided to leverage our hospitality experience to offer a first of its kind end to end fully managed living experience,” he shared while adding that, “This launch, therefore, marks a key milestone as we embark on our journey towards becoming India’s biggest provider of housing, consolidating our position as a category innovator and leader.”
A Big Step in a Big Industry But There’s Place For All
So far, OYO had been working around hotel experiences but with this, it comes down to becoming an everyday part of their user’s life. An industry so big does come in with big opportunities and bigger responsibilities. Nishit Sharma, Co-Founder, Reniso.com, said that the real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and the residential renting market is estimated to be $ 20 billion strong. “Oyo's expansion in the renting segment is a well thought off plan as the market has huge potential and opportunity,” he said.
But does it bring competition to their own business? He said that Reniso brings an asset management approach to property owners through a 3-step mantra, Value Preservation, Value Enhancement, and Value Realization. This makes Reniso a holistic service provider for homeowners facing difficulties in managing their property investments due to lack of time, proximity or expertise. So indulging in a holistic offering they will be able to stand apart in the crowd.
OYO’s Entry Will Attract Investors & Regularize the Sector
Now, given the huge potential that exists in the real estate industry, many believe that there is always space for more. Anshul Gupta, Co-founder, FastFox.com believes that OYO getting into bachelor housing is good news as now the home rental market is moving away from individual brokers to organised corporate players.
Gupta also believes that will re-ensure the faith of investors for other players in the segment. “The individual bachelor house renting space has had some big venture-backed entities and the entry of Oyo is going to further expand that market. There is no dearth of demand and there is enough space for more than one players to build value,” he said. He added that while they are not directly in competition with Oyo, they are excited about the additional thrust it will bring to the regularisation of the home rental industry.