Housing rates might be continuously soaring, but the demand for high-end rentals has seen its highest peak so far. It began in 2017 wherein most buildings constructed were high-end condominiums catering to the so-called “millennial” demographic.
With the entrance of 2018, the trend continued, and construction of luxury rental properties rose not only in Canada but also in the United States, where apartment construction saw a 79% rise. As proof of this culture of rental resurgence, the Philippines, which is fast becoming one of Asia’s top real estate investment hotspot, has the highest gross rental yield in the Asian region. This is attributed to the country’s BPO industry that has seen continuous growth, steadily attracting a new breed of tenants, both local and foreign.
In Vancouver, industry experts like ENM Construction co-founder, Dan Greenhalgh has emphasized that the need for B.C. rentals intensify its construction of purpose-built high-end rentals. “We should encourage municipalities to streamline applications for purpose-built rentals and affordable housing projects. It’d be great if there were more funding to help local governments increase their staff and capacity for permit applications,” Greenhalgh added.
But what is fueling this trend? According to Jason Turcotte, vice president of development at Cressey, the two primary drivers for this demand for high-end rentals are standing at opposite ends of the age spectrum: the millennials and the retirees.
WHY MILLENIALS LOVE RENTALS
According to Turcotte, with many of this demographic having well-paying jobs, they can handle a high mortgage payment. Members of this demographic do not want to wait or compromise and want to get everything that they desire, which includes:
High-end rentals come with free amenities at a higher cost to owners. With these range of perks from electric car charging ports to gyms and concierge services, this is a primary attractor for millennials who are going for the “hip” lifestyle.
Shared spaces are also a plus for millennials who enjoy pop culture and the nightlife. However, either because of their careers or their financial ability to afford a suburban house, developing a community the old fashioned way is out of the question. The residential neighborhood that grows out of rentals is the new “suburb” for the millennial.
Renting has a lesser sense of commitment than owning a home, and millennials are all about such flexibility. Once they get tired of a particular lifestyle, they can opt out, pick out their roots, and settle down someplace else. Rentals afford them with this flexibility.
WHY RETIREES LOVE RENTALS
On the flip side, older people are also falling in love with apartments. Slowly, retirees are catching up to the benefits of selling their home and reinvesting it to rentals, and this is why:
Lets them travel
Frees up equity
Landlord doing the job
The hip and active lifestyle is not limited to the millennials. The retirees are getting a piece of the action as well, and this will not be possible if they are tied down by their home. Choosing rentals over their homes allows them to do things, go to places and meet people.
As mentioned above, older people nowadays want to do things. Choosing rentals over their homes pads their pockets and helps fund their ventures.
Aging is part of retirees’ problems and maintaining a home can be problematic. With rentals, this burden is lifted from the owner and transferred to the landlord. They love the fact that it is no longer their job to clean the gutters or replace the bulb.
Industry experts like Dan Greenhalgh look at these trends and see a bright future for the high-end rentals industry. So should you!