The rent now, pay later sector in Saudi Arabia is poised for considerable expansion, with startup Rize set to enhance the industry’s efficiency.
Given the substantial down payment required for tenants to secure a rental property in the Kingdom, the company is seeking to foster greater sustainability within the sector.
Established in 2021 by Ibrahim Balilah and Mohammed Al-Fraihi, Rize is optimizing the Saudi rental market with its innovative model that converts annual lease payments from a single full payment to 12 monthly installments for tenants, while property owners get the full annual rent upfront.
In an interview with Arab News, Balilah discussed the company’s goal to widen access to flexible renting solutions.
“Currently, Rize is active in Riyadh, Jeddah and Dammam. But we are not only looking to solidify our position in the Saudi market but also to venture into the commercial sector,” he said.
Balilah outlined the company’s financial objectives, aiming to secure over SR50 million ($13.3 million) in successful rental requests by 2024 to showcase its growth. “With approximately SR330 million in rental requests already received, Rize is on a strategic path to scale its operations to align with the increasing market demand,” he said.
Playing a pioneering role
Discussing the RNPL sector, Balilah emphasized Rize’s position as one of its trailblazers.
“We consider ourselves the leader in the rent now, pay later market, being the first to develop an application that streamlines the entire rental journey,” he stated.
The company is currently in a phase of scaling, with plans to automate various processes, including contract signing, tenant screening, and access to e-booking through the app, which are typically cumbersome for tenants.
Furthermore, Balilah highlighted Rize’s strategic partnerships with real estate owners, granting the company access to a wide range of apartments, further solidifying its market presence.
He elaborated on the company’s strategic approach to securing funding and fostering relationships with venture capitalists.
In February, Rize raised $2.9 million through a seed round from Seedra Ventures, Hala Ventures, JOA Capital, RZM Investments, Bonat Investments, and Nama Ventures, as well as a group of angel investors.
“We view our business model as one that necessitates funding, which led us to intentionally engage with seven venture capital firms across two investment rounds,” Balilah explained.
The choice to attract multiple VCs, albeit with smaller investment amounts, was deliberate. This strategy not only secures immediate capital but also establishes a foundation for future financial support.
“Our selection of VCs was strategic, focusing on those with a follow-on investment strategy, ensuring we have access to capital in subsequent rounds,” Balilah noted.
Furthermore, he revealed plans for a Series A funding round in the next 12 months to fuel the company’s expansion and sustain its upward momentum.
Easing pressure on expats
Balilah underscored the crucial role of the rental market in supporting Saudi Arabia’s hospitality sector, driven by the substantial expatriate population residing in the Kingdom.
“Last year, the Kingdom witnessed the signing of Ejar contracts worth over SR75 billion, marking a significant activity in Saudi Arabia’s official rental contracting,” he highlighted.
Balilah pointed out a significant challenge within the rental market, attributing it to a lack of innovation and technological integration, which complicates rental transactions.
He explained: “Due to a combination of factors, including insufficient regulation, innovation, and technology, it has become a norm for property owners to demand the entire rental sum upfront. “For instance, renting an apartment at SR100,000 annually typically requires a single advance payment. Though some owners might allow semi-annual payments, this practice significantly strains renters’ cash flow in Saudi Arabia.”
Balilah emphasized the pressure on some tenants to secure loans to manage these upfront costs, exacerbating the financial strain.
“Rize addresses this issue by handling the upfront payment and then leasing the property back to the tenant on a monthly basis,” he explained.
Balilah detailed the company’s tenant-focused approach, saying: “Primarily, tenants apply through our app, providing details about their desired unit, personal information, and then submitting their request.
“Upon receiving this, we conduct tenant screening. Once approved, we negotiate with the property owner to facilitate the transaction.”
He went on to explain that they then introduce their rent now, pay later model to the owners, possibly for the first time, explaining that they will rent from them to sublease back to the tenant with a single payment, converting it into monthly installments.
Balilah added: “We also reassure the owner about the tenant’s reliability, highlighting their employment and other relevant details as part of our comprehensive service.”
Furthermore, Rize offers a marketplace for renters who understand and support the RNPL model.
This approach smoothens the renter’s interaction with tenants, giving them access to book directly through the application.
The company has managed to secure partnerships with large real estate developers like Al Safa, Al Ramz, Makeen, Al Majdiah and Al Ajlan Riviera, which are all incorporating Rize’s offerings.
Balilah further pointed out that the RNPL business model has seen significant interest from real estate owners as it increases their chances to lease their units faster.
Source:https://arab.news/zamn4