India’s Rental Economy Making Life Easier for 400 Million Millennials

India is home of 1.3 billion people. Interestingly, the world’s second-fastest-growing economy has the biggest population of millennials in the world — more than China. With more than 400 million millennials, there’s no wonder this generation is shaping up the country’s consumption and spending patterns.

Over the past few years, the last lot of millennials have graduated from college and entered the workforce (those born from 1981 to 1996). Now, they all have buying power. Considered the holy grail among brands and marketers, Morgan Stanley predicts this 34% of India’s total population will spend over $330 billion annually by 2020.

Despite the growth in spending, buying isn’t really their preference though. As a matter of fact, millennials’ penchant for renting has empowered the renting or “shared economy” of India.

Rental startups have been pouring in the country, popping up at every corner of India. These companies offer just about every item or service that could be rented. And their continuous growth only proves that this shared economy isn’t going anywhere.

The surge in twenty-somethings moving into the city, influence in the country dictate renting as a better option for many. Urban millennials prefer the affordability, reliability, and mobility of renting, but more importantly, its flexibility.

“Cost is definitely one factor but that’s not the main reason … People subscribe to something because of the freedom to change, the freedom to unsubscribe,” shared Ajith Karimpana, Founder and CEO of Furlenco.

Affordability

According to a 2016 survey by Statista, the leading reason why millennials rent versus purchasing a property is the cost. Over 56% of the respondents say their financial circumstances point to renting as the better option.

With a median salary of INR 16,500, 75% of the population earning less than INR41,000 a month, and an average house price in the metro of 20 lakhs, it’s easy to see why young professionals prefer to think of them now and spend on renting than invest in the future and purchase a home. Add to this the fact that buying a house is at least four times more expensive than renting with home loans slapping interest rates upwards of 8%.

But Indian millennials aren’t stopping with just home rentals. They’re pushing the envelope in this growing trend. Today, more and more companies are offering rentals on almost everything — Bounce is there for transportation, Nestaway for homes, WeWork for office spaces. There are services for renting furniture, medical equipment, and even clothing and accessories.

Renting allows millennials to live their best life — have the latest, the hippest without spending too much at the onset.

Flexibility

Flexibility is one other key factor in this rental economy. For housing, having the option to move from one city to another is a big draw in for people. Living closer to work is very important with commuting traffic and expenses, and owning a home doesn’t offer the option to live somewhere conveniently located near the workplace.

Renting also offers the opportunity to stay in trend with the latest in fashion, home decor, and technology without having to overspend. Ziniosa, for example, is a monthly subscription service that lends luxury bags to its consumers. Every month, their stylist carefully curates items for each user and ships them out to subscribers. The subscriber gets to keep the bag for four weeks before another item is delivered the following month.

“You get to keep the box for a month and at the end, you get a new box with brand new styles keeping your style fresh and chic month after month,” the service noted.

RentoMojo offers rental on a range of home items, including furniture and appliances. The service offers free relocation for those moving to a new city; free maintenance on rented products; and the option to upgrade to newer items at any time.

This generation is infamous for its impatience, and wanting things right away makes rental services a viable option for many. No need to save up to enjoy things — if they want it today, they can get it today.

Found a better service? They can jump ship at any time, giving them more flexibility in their decisions. Rental and subscription services give the ultimate power to consumers.

Reliability

“Reliable” may not be a word many consider when thinking about renting. But because rental services are synonymous with monthly subscriptions and items can be returned and reused at any time, companies (or lessors) make sure they provide regular maintenance services. This makes sure all rentals are in tip-top condition at all times.

Startups like DrinkPrime offers smart water purifier on subscription. The startup rents out a state-of-the-art purifier that self-monitors the water quality and filter. This helps the company proactively keep the purifiers at their best so consumers don’t have to worry about anything. Especially 2018 India Rent Report noted that water supply is a top priority among renters.

“Access to pure drinking water is one of the biggest problems in India. We aim to solve this by offering a reliable and cost-efficient solution. We are more than just a rental startup. Our users rely on us for their health and wellbeing,” said Vijender Reddy, co-founder of DrinkPrime.

Portea, on the other hand, provides healthcare equipment on rent. Consumers may rent their equipment via its website and the service will deliver the item straight to the user’s home. Customers may also avail of healthcare professional services for the short or long-term.

With Bounce, users can book one of its keyless scooters on the app from anywhere in Bangalore and drop the bike anywhere as well. Gas is covered by the service and a mechanic is on standby should any of the bikes breakdown.

“What we are trying to accomplish is to give consumers the feeling of private ownership at a much cheaper cost. It’s easy safe and reliable,” Vivekananda Hallekere, Bounce Founder noted.

With all these being said, it doesn’t look like India’s “shared economy” is going away anytime soon. But it’s not a bad thing either. The system is serving the causes of both retailers and consumers — entrepreneurs continue to have strong businesses (which also help the economy), while the community of millennials have budget-friendly, flexible options that allow them to get the best in life.