NoBroker Eyes Booming Opportunity in Home Loans, Insurance as Younger Consumers Seek Investment
Bengaluru-based prop-tech startup NoBroker, backed by Tiger Global, is capitalizing on the growing demand for home loans and insurance services as younger buyers increasingly seek to invest in houses.
According to Saurabh Garg, co-founder and chief business officer at NoBroker, the company's financial services division accounts for around a fourth of its ₹600 crore revenue. The firm expects its home loans vertical to become one of its second-biggest businesses, trailing its core real estate buying-and-selling operation, over the coming years.
Garg noted that the company is seeing rapid growth in its home loans business, which has grown threefold in FY24. This growth stems from increasing demand for accessible home financing options as the home-buying cycle is expected to pick up well over the next 4-5 years. With interest rates forecasted to decline and average rent inflation outpacing annual salary increments, consumers are reevaluating their housing decisions.
"We're seeing a surge in inquiries from buyers in this age group who are looking at properties as an investment opportunity rather than just as a place to live," Garg said. These young buyers, primarily employed professionals aged 25-35, prioritize building wealth and stability over property ownership as the ultimate milestone.
As a result, NoBroker has tied up with several banks and NBFCs, including HDFC, State Bank of India, and Kotak Mahindra Bank, to offer financing options after preliminary checks on income proof and credit scores. The startup takes a commission from each processed transaction and is committed to expanding its services and products.
While some analysts question the sustainability of NoBroker's growth model, citing intense competition from established players, Garg remains optimistic about the future prospects of home loans and insurance services.
"The real estate sector moves in cycles, and now that we've come out of a slow-growth phase, we're entering a fast-growth stage," he said. "We believe there's genuine demand for easy financing options, which will drive our growth."
To diversify its revenue streams, NoBroker aims to introduce new products, such as short-term financing options and insurance services. The firm is constantly experimenting with innovative ideas, with some rollouts expected to take four to five months.
With operating revenue growing 87% to ₹609 crore in FY23, albeit with wider losses of ₹506 crore, Garg expressed optimism about the company's prospects for FY24. When asked about its competitive landscape, a late-stage investor noted that while NoBroker faces stiff competition, diversifying revenue streams will help the startup maintain growth.
As the Indian real estate market continues to boom, NoBroker is well-positioned to capitalize on the growing demand for home loans and insurance services.