LWS reveals 3 reasons why Gen Z & Gen Y focus on renting more than buying a home. This is an opportunity for investors to invest in a home to rent out for an average investment return of 4-9% per year.

Mr. Prapan Saksak Rakchaiwan, Managing Director of LWS Wisdom & Solutions Co., Ltd., a real estate research and development company under L.P.N. Development Co., Ltd. (Public Company Limited), revealed the results of a survey on the home buying behavior of Gen Z (aged 16-28 years old) and Gen Y (aged 29-44 years old) in late 2024, totaling 670 people. It was found that 66% of the respondents were interested in "renting" a home more than buying their own.

The survey results are consistent with the latest SCB (EIC) study, which stated that the new generation or First Jobbers choose to rent a home more than buy. As a result, the transfer of residential property in the Bangkok and surrounding areas tends to continuously decrease. It is estimated that in 2024, the transfer of property in Bangkok and its vicinity will decrease by approximately 10% compared to 2023. It is expected that in 2025, the transfer of property in the Bangkok and surrounding areas will continuously decrease by approximately 1-3% from 2024. Mr. Prapan Sak said that from the study results of LWS, it was found that 3 important reasons of Gen Z & Gen Y who are interested in "renting" more than "buying" a residence are:

1. "Renting" meets the flexibility of life. The new generation or First Jobber has a lifestyle that emphasizes mobility and can change conveniently when needed, whether it is moving work or changing residences to convenient locations, searching for life experiences in different areas. From the reasons for living a life above, buying a residence causes long-term financial burdens that are not consistent with the lifestyle. From the survey of LWS, it was found that the new generation group rents up to 66%, with more than 60% of them being women, single, and having an average monthly rent of 5,000-10,000 baht. The factor in choosing to rent is the convenience of travel. The rental price is not too high, the environment is good, the common area is suitable for the lifestyle, and there is parking for both cars and motorcycles.

2. Uncertainty and volatility of the Thai economy The volatile economy, which affects the ability to generate income in the long term, is a factor that makes people in Gen Z and Gen Y who have uncertain income or are not confident in their ability to generate income in the future, not ready to create long-term debt. Renting is an option that meets the financial status of this group of people more.

3. Investment & Future The investment management behavior of Gen Z and Gen Y at present is driven by Content Creators or Influencers who are individuals with expertise in finance and investment, resulting in the management of investments in a variety of assets, including stocks, bonds, mutual funds, cryptocurrencies, and gold investments. From the variety of choices, people in this generation choose to save money to invest rather than buying a house, which requires a lot of capital and is a long-term debt burden.

“Investment to Rent” Opportunity for Investors From such behavior, Mr. Prapan Sak said that it is an opportunity for real estate entrepreneurs to develop housing projects to meet the behavior of Gen Z and Gen Y, who are the main purchasing power at present and in the future, such as: - Hire-purchase model, pay first, own later For future ownership, suitable for First Jobbers or those with unstable income or those who do not want to have long-term debt. - Hire-purchase model or flexible rental in the form of packages, each package has condos in many areas that tenants can choose to plan their living and change or move condos throughout the lease term under the same monthly rental rate according to the package. - There are services to support tenants both before and after moving in, such as moving services, cleaning, air conditioner cleaning, repairs, etc.

Including the development of a model for selling condominiums to investors by guaranteeing a return on investment, finding tenants to meet the needs of high-income groups, and finding investment sources that provide higher returns than deposits and lower risks than investing in stocks or bonds, etc.

“I see the change in behavior of the new generation as an opportunity to develop a business model for the real estate sector that will generate income in the long term, including investors who want to invest in businesses that provide stable returns and are low-risk. If we have 1-2 million baht to invest in a condominium and rent it out at 5,000-10,000 baht per month, we can generate a return on investment of 4-9%, depending on the cost of purchasing a residence and the rental price, which is a higher return than current deposits and lower risks than investing in stocks,” said Mr. Prapan Sak.

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