Shifting to cities in pursuit of jobs, PG dwellers can bank on online rental segment
A sustained demand for office space in cities will transform the PG rental market to an even bigger scale
The home renters’ market for young office goers and students is getting stronger together with a corresponding rise in demand for office space. Online PG (Paying Guest) rental segment is set to expand in a big way as our metros make way for more office spaces.
Among all the metros, Bengaluru is the hottest market for PG rentals as here the office space demand is pegged at 10 million sq ft., of which around 4 million sq ft was leased in the first quarter of 2016 alone. The future too, looks bright, as more construction and concentration on office space is becoming the focus of many a developers here.
A sustained demand for office space in cities will transform the PG rental market to an even bigger scale.
Online home rental set ups are, therefore, springing up in cities like Bengaluru, Mumbai, Pune, Delhi NCR, and Hyderabad, where a considerable high concentration of working professionals and students are present.
Some realty portals have fast become the lifeline of this large populace which wants to abstain from paying the brokerage fee. Nurturing this market are Mumbai-based Cryptopy Technologies Pvt. Ltd that runs portal Grabhouse.com, Bangalore-based NestAway Technologies that works through an app, and Delhi-based hostel and apartment rental listing web site Zocalo.in and Eezyrent based in Mumbai, among others.
The PG rental scenario so far
With the ever-growing demand for PGs, the segment has metamorphosed in a very unorganised and unstructured manner, over the years. PGs have sprung up in every nook and corner; however, there has been no credible check to verify if they abide by the rules and regulations.
Today, as our youth is moving from one city to another in pursuit of jobs, arriving in new surroundings and cities, the traditional approach of referrals via friends, neighbours or advertorials without authenticity hold little relevance for them. Owing to a fast paced life, lack of time and convenience topping the priority for these youths, home rental experience has to be fast and hassle-free.
With an exponential increase in migrant population - there has been an increase of 1.2% in the demand for PGs in Gurugram this year compared to 2015 and Bengaluru leads with a whopping 2.5% increase in the demand for PGs - catering to the cosmopolitan nature of the PG segment which is a challenge for the home rental providers. The paying guest rental segment has to come out of its traditional ways.
Grey areas in the PG business
Credibility issue: Credibility factor is one issue that not only the owners but also the PG dwellers have to contend with. PG seekers often overlook the various mandatory checks required while PG hunting. Mostly, PGs are not registered, that compounds the problem of young professionals who demand rent receipts and proper documentation of the accommodated place.
Also, getting the deposit back can be a tough task for them in the absence of a licensed PG and without any proofs at disposal. Often, PG owners fail to meet all mandated legal requirements like adequate security and registering with the closest police station for timely assistance in case of mishaps.
For the PG owners, trusting the migrant youth - student or working professional is one big issue for them. Sometimes, they face the problem of rents not being paid and so having to look out for another tenant is cumbersome.
Issues related to amenities and service quality: Even youngsters have a right to homely environment and experience even though they are singletons. A lot of PGs fail to provide consistent basic amenities. This can mean different things to varied individuals: ranging from anything like food to Wi-Fi to accessibility and service quality. As quite a few North Indians land up in the South for work and vice-versa, the non-vegetarian food clan finds it tough when food and drink restrictions are laid; this becomes a major grouse of these tenants.
Compatibility issues: Consider this, owner barging in unannounced just because the tenant is not a family man and likes to gather with friends occasionally to let loose and celebrate life. According no privacy is what the youngsters abhor. Also, checking up on female tenants so no male hangs out is what frustrates them. One common pain point in the functioning of the PG business is the compatibility issue between owners and tenants and between PG dwellers in case of shared accommodation. Sometimes, owners lay down their own rules, which disturb the lifestyle of tenants. This creates misunderstandings which can be avoided if owners lay down the restrictions upfront while signing up for a tenant.
Transformation needed in the PG rental scene
All these issues can be easily rectified by elevating the standards of PG and mapping them to the requirements of tenants by understanding the pulse of the millennials.
According to Grabhouse, a player in the online PG segment, to transform the PG scene one needs to bring in the much needed standardisation and regulation to create the ideal living space experience. Moreover, credible options can make the renting process much easier for PG seekers.
Grabhouse has been able to come up by having a large inventory of PGs across Bengaluru, Hyderabad and Delhi. Instead of providing PG seekers with multiple options which might confuse them, Grabhouse site offers a selected range of options ensuring a better and convenient experience.
Pankhuri Shrivastava, Co-founder, CMO, Grabhouse.com says, “We aim to use technology to bring-in the much needed standardisation in the PG market. With the help of our internal analytics engine, we are able to map onto our TG (target group) better and provide solutions that meet their core requirements.”`
Real-time data and stats, she says, can thus be used to provide customised options – budget, area preference, amenities etc. This not only standardises the PG space but brings in some form of order and uniformity in this otherwise unorganised sector.
Evidently, the increased uptake in the salary of these working professionals is driving the PG rental business forward. And the young force is calling the shots by demanding services suited to their lifestyle choices.
"Bangalore is expected to see the second highest absorption in the APAC region and the highest demand in the country owing to expansion of the IT, ITeS and multi-national companies," C&W said in a statement.
The rental will be around Rs 90 per sq ft per month for fully furnished office space.
Global economic slowdown is pushing corporates to postpone their expansion plans, which is bad news for the office space leasing segment in India. Experts said on an average, the absorption of office space during first half (H1) of 2012 declined 32 percent