Mr. Prabhan Sak Raksaiwan, Managing Director of LWSS Wisdom and Solutions Co., Ltd. (LWSS), a real estate research and development company under LPD Development Public Company Limited, discussed the trend of home purchasing among the younger generation. According to a survey conducted by the Service Design Center (SDC) of LWSS over the past 2-3 years, it was found that the younger generations, Gen Y and Gen Z (First Jobbers), currently prefer renting over buying. The survey revealed that over 50% of this group are renters, with an average rental budget of 6,000-10,000 THB/month and an average monthly income of 20,000-40,000 THB. This is because they seek residences that cater to their lifestyle, with a tendency to live alone and a preference for comfortable living spaces equipped with technology that meets their needs. Additionally, their hybrid work lifestyle requires flexibility in both work and daily life, while avoiding high expenses that could impact their daily living. Thus, renting is more appealing than buying, especially as property prices continue to rise due to increasing land prices and development costs. The latest research report from LWSS indicates that the average price of residences in the Bangkok metropolitan area in 2023 is 5.49 million THB per unit, a 24% increase from the average price of 4.43 million THB per unit in 2022.

“Current housing prices have risen beyond the purchasing power of the younger generation just starting their careers, leading them to choose renting over buying. This presents an opportunity for investors, as over 65% of buyers for investment purposes are from the Gen X and Baby Boomer groups, who are looking to purchase condominiums for rental income, which offers an average return on investment of 4-6%, depending on the location,” said Mr. Prabhan Sak.

Based on the behavior of renters seeking residences that meet their needs, particularly in convenient locations, it is essential for investors to consider the preferences of tenants when purchasing properties, especially condominiums. According to a survey by LWSS, there are 5 key factors for developing and selecting rental properties that cater to tenants:

1) Potential Location

This is the first factor that investors must carefully consider, as it is crucial in determining the value of the condominium. Investors should choose properties in locations that meet the lifestyle needs of Gen Y and Gen Z, particularly near transit lines and various amenities. LWSS's survey found that over 90% of residents choose their homes based on the convenience of commuting to work or school, ideally within 5 kilometers or a 20-minute travel time. Once rented, tenants tend to stay long-term due to familiarity with the area.

2) Reputable Property Developers and Professional Management Companies

Investors should select condominiums from reputable developers known in the market, with a focus on environmentally friendly project development from design to construction and sustainable living. Additionally, after-sales services through technology and a skilled property management team can enhance the value of the project, instilling confidence in investors and facilitating easier rentals.

3) Development of SMART LIVING Condominiums with Comprehensive Amenities

Given the younger generation's emphasis on convenience, over 50% desire IoT devices that allow control of appliances in their homes. Common areas should cater to their needs, such as CO-WORKING SPACES with WIFI for hybrid work, as well as fitness centers, swimming pools, and automated services, ideally available 24/7 to attract more tenants and justify higher rental prices.

4) Professional Real Estate Agents

Investors should engage with experts in rental management or professional real estate agents who offer comprehensive services, from marketing to screening potential tenants and facilitating quick rentals. LWSS's survey found that 48% of respondents consider finding repair/install technicians a hassle, while 44% find moving difficult and seek assistance. Therefore, having a professional to coordinate and assist from CHECK-IN to CHECK-OUT is crucial for investors.

5) Special Services for Renters

In addition to maintaining rental units in good condition, investors should offer special services during the lease, such as free air conditioning cleaning every six months and one cleaning service within a 12-month lease. This not only enhances tenant satisfaction but also helps maintain the property. Offering incentives for lease renewals, such as rental discounts or free parking, can encourage current tenants to renew their leases, avoiding the costs of finding new tenants each year.

“Given the behavior of the younger generation, referred to as Generation Rent, who are more inclined to rent than buy, developing projects for investors to rent out is a viable option for real estate developers to meet the needs of both investors and tenants. The five factors mentioned are essential considerations for developing residential properties today, especially in the condominium sector, which both real estate developers and investors should keep in mind,” concluded Mr. Prabhan Sak.