“Generation rent” is on the rise. Rental housing is a popular choice among people at all phases of life, driven partially by various economic developments. Such conditions have caused renewed appreciation for the benefits of renting—from easy move-in to freedom from taxes and maintenance woes.
In the US, the rental market has seen an uptrend, bringing the number of renters to 43 million by 2013, according to a Harvard study. The trend is also happening in some developing countries. In the Philippines, these benefits (and restrictions) have attracted over two-thirds (69%) of Filipinos to rent rather than purchase property, according to a Lamudi research. The younger generation in the country likes the fact that renting allows some flexibility in location, living conditions, and rates.
But the younger generation cannot claim monopoly of the trend. It is fitting to ask: who makes up this “generation rent” that would rather live on another’s property than buying their own? For condo owners turned landlords, it is important to understand who their market is. The condo rental market offers a broad array of homes for different people. Once you have decided to rent out your space, it is imperative that you know the types of individuals who are most likely to rent so you can create your strategy around the market: short-term or long-term, furnished or unfurnished, allow subletting or not, etc.
We did the homework for you. Here are the people who are likely hunting for condos for rent in the Philippines right now.
The Young and Hopeful
Millennials are known to defy traditions. As Baby Boomers are to buying a home, millennials are to renting a home. That doesn’t necessarily mean millennials are not dreaming of a house of their own, but in the meantime, they find renting to be a more practical choice.
Young professionals are among those who are most likely to rent a condo given their lifestyle: a mix of work and play. At the same time, most yuppies find the location of condos convenient. There is a significant reduction in commute hours because most condos for rent are located at the heart of the metropolis, near business districts and essentially all places that matter. Because of this, traffic ceases to be a problem.
The number of BPO workers has hit the one million mark this year. Along with this development is the upsurge for office space rentals that have boosted the property market. This is why targeting BPO workers to rent is a good move.
However, condo landlords may have to relax their rates and their rules a little bit. Using more than 80,000 listings in Metro Manila’s CBDs, Lamudi found that BPO workers would struggle renting a condo if they were to apply the 30% rule, or restricting your rental budget to one-third of your income. Taking this into consideration, allowing subletting or room sharing may be a viable way to go.
Newly Weds and Start-Up Families
Newly-wed couples look forward to having a home of their own. But no dream home comes cheap and easy. Still reeling from wedding expenses and the costs of building a family, a lot of newly-wed couples take the practical route and rent their first home.
In Singapore, a sample household survey found that 21.2% of young people aged 35 and below lived in a rented flat or private property after marriage. This is also true for young Filipino couples who refuse to share a house with their parents or in-laws after the wedding and instead choose to rent a space of their own.
Condominiums are also a popular choice among small families. Contrary to traditional claims that condos are not a good environment to raise children, many millennials and young parents see the benefits of raising children in a vibrant but controlled environment. Condos have facilities and amenities such as recreational areas and sports hubs that can aid in developing a child’s motor and social skills. Major real estate companies such as DMCI Leasing are also investing on allocating more open spaces in their condominium communities to accommodate families who would like to take walks, ride bikes, or have picnics.
Expats and Retirees
The Philippines has many cities that are great for retirees and expats. For expats, raising a family in the country do not cost as much and all basic services are readily accessible.
The idea of condos for retirees may seem a little off-beat, given the traditional notion that most retirees would want to retire in a home near the beach, on a farm, or in the woods. But condos also make a good retirement home. They can enjoy facilities that can keep them healthy. At the same time, they have hospitals and recreational centers right outside their doorstep.
According to consultancy firm CBRE Philippines, expats see an investment potential in the local real estate market. The home of their choice: luxury condos. If you are a landlord searching for a market who can afford upscale condos and developments, expats are who you are looking for. Expats have an appreciation for the luxurious way of life, so being at the heart of the metropolis is an advantage.
Tourists and Vacationers
The Philippines is being considered as the fastest growing market for Airbnb, a website for people who rent out lodging for a short period of time. Airbnb lodging is poised to give hotels a run for their money so might as well take a stab at it.
You can offer your condos to foreigners and tourists who are in the country for business or vacation. But before you do, you have to be aware of the repercussions, most especially not having a regular tenant to generate a regular cash flow.
Do not underestimate the power of the undecided. Renting a condo is an attractive option especially for people who have yet to find their dream home. They are left with no choice but to rent in the meantime. Renting will give them an idea on how it is to build a home and maintain it.
The condo rental market is truly a profitable venture as it is an attractive preference for several sectors of the community. The important thing for condo owners turned landlords is to familiarize themselves with the market vis-a-vis location, rates, and lifestyle.