Younger generations prefer renting property, driving 4–9% yields

A recent survey conducted by LWS Wisdom and Solutions, a management consulting firm, reveals that over 66% of Gen Z and Gen Y are opting to rent rather than buy residential properties. This shift signifies a structural transformation in Thailand’s real estate market.

This trend not only highlights changing consumer behaviour but also presents fresh investment opportunities. As real estate evolves from being a “home of one’s own” to a “source of returns.”

Praphansak Rakchaiwan, chief executive of LWS, notes that this movement aligns with findings from Siam Commercial Bank’s Economic Intelligence Centre (SCB EIC), which indicate a continued decline in property ownership transfers in Bangkok and its surrounding areas. 

Several key factors drive this shift:

• Flexibility over stability: Gen Z and Gen Y have grown up in a rapidly changing world, with dynamic lifestyles that involve career moves and relocations. Renting offers adaptability, eliminating the burden of long-term mortgage debt.
  According to LWS, 66% of young individuals prefer renting, with women making up 60% of tenants. Most are single, with an average monthly rental budget of 5,000–10,000 baht. Their rental choices are influenced by convenience, affordability, quality surroundings, well-designed communal spaces, and parking availability.
• Economic uncertainty and financial security: in an era of rising living costs and fluctuating income, younger generations prefer to avoid long-term financial liabilities. Renting allows greater financial flexibility, especially as economic instability affects future earning potential. Those with irregular incomes or concerns about financial security favour renting over homeownership.
• Diverse investment choices: Gen Z and Gen Y have diversified their investments through platforms and financial influencers, opting for assets such as stocks, mutual funds, gold and cryptocurrency. These options yield quicker returns compared to property, which may be harder to liquidate.

This trend creates lucrative opportunities for real estate investors. Praphansak highlights that the “buy-to-let” model is becoming increasingly attractive, with rental investments delivering annual returns of 4–9%. Condominiums priced at 1–2 million baht can generate rental income ranging from 5,000–10,000 baht per month.

With low deposit interest rates and high stock market risks, rental properties offer a balance of stable income and low risk. Developers and investors are responding with tailored solutions, including:

• Flexible rent-to-own plans: tenants can lease with an option to purchase in the future.
• Fixed-price multi-location rentals: designed for those who frequently change neighbourhoods.
• Comprehensive services: covering pre- and post-tenancy needs such as moving assistance, cleaning and maintenance.

Additionally, small-scale investors can acquire units and entrust companies to manage tenancy agreements and rental administration, with guaranteed returns.