Hironori Katsuse, CEO of Oyo Technology & Hospitality Japan K.K.
By Takeshi Suga
TOKYO, NNA - Leading Indian hotel chain operator Oyo is making a quick foray into Japan’s rental housing market with a new smartphone-based service, offering affordable prices and flexible move-out choices, in an attempt to bring about changes there.
Oyo Technology & Hospitality Japan K.K., a joint venture with portal site operator Yahoo Japan Corp., launched the service, Oyo Life, in early March and provides rental housing in central Tokyo, all equipped with furniture and home appliances, with their rents including expenses for utilities, communications such as Wi-Fi and basic amenities.
Customers can complete a set of necessary procedures online via their smartphones -- from property search and making a contract to payment for rent. Unlike conventional rental contracts, tenants do not have to pay any advance money such as deposits and brokerage fees, being free to move in or move out at any time.
“In the Japanese rental housing market, demand used to exceed supply, placing borrowers in a weak position with little flexibility,” said Hironori Katsuse, CEO of Oyo Technology.
Noting that Japan’s declining population will see supply eventually outstrip demand, Katsuse said rental services should be more flexible for clients to meet the needs of the times.
In Japan, consumer preference has been changing from “ownership” to “use” of goods and services, as typified by the shift toward subscription services for music, apparel and furniture.
Under the concept of “lifestyle like traveling,” the new service mainly targets young people oriented toward subscription-style consumption. The Tokyo-based venture aims to capture the needs of consumers who want to keep costs low while changing housing frequently to suit their lifestyles.
Traditionally, the longer tenants stay in rental housing, the lower the rent they pay. The overall cost of the Oyo Life service, however, can be kept low if tenants stay for 18 months or shorter because their rent is all inclusive despite relatively higher monthly rents compared with those for conventional rental apartments of the same level, according to the venture. Oyo Life’s rents for apartment-style housing are set between 100,000 yen ($939) and 1 million yen per month.
Oyo Technology, owned 66.1 percent by Oyo and 33.9 percent by Yahoo Japan, secured more than 1,000 properties in Tokyo’s 23 wards for use in the Oyo Life service by the end of March.
Property owners are guaranteed rental income as the company takes on all properties and subleases them to its customers while undertaking regular maintenance. Owners also can count on Yahoo Japan’s marketing power and ability to attract customers.
Katsuse said the service has had “a good start” with over 10,000 rental applicants so far. The company plans to increase the number of properties available for the service at a pace of 30 to 70 per day, eyeing nationwide expansion in the future, according to the CEO.
India’s Oyo is running hotel chains in more than 500 cities in 10 countries including China and Indonesia, as well as in India itself. Japan represents the first market for its rental housing business.
The venture opted for the rental housing service in Japan over hotel business because its market size is over 10 times larger than that of the hotel industry and the market is in transition due to the country’s dwindling population, Katsuse said. Also, other companies have already provided information technology-based solutions for hotel agencies, he added.
“Some have compared our business to ‘a black ship from India’ seeking to upset the order of real estate in Japan, but that’s completely wrong,” Katsuse said.
“As Japan confronts its falling population, we hope to create a system that satisfies everyone in the market -- tenants, property owners and agencies -- by making up for something missing in rental real estate.”
A rental housing property provided by Oyo Technology & Hospitality Japan K.K. (Photo courtesy of Oyo)