WORDS: DEBBIE HATHWAY :: PHOTOS: SUPPLIED
Lock-up and go rental accommodation ticks many boxes for millennials who are less interested in the financial security associated with property investment.
When choosing where and how to live, millennials are in no hurry to invest in property, often preferring the flexibility and freedom offered through rentals. With different priorities to the Baby Boomers who were starting families and purchasing propertyin their twenties, today’s 30-somethings choosing lock-up and go rental accommodation in city centres worldwide.
According to Celeste van Graan, Sales and Leasing Manager at Harbour Arch in Cape Town, renting has many benefits. “Given the state of our economy and current high interest rates, getting onto the property ladder isn’t easy for youngsters who haven’t yet accumulated financial capital. 100% bonds are rare, banks often require substantial deposits, and conveyancing and transfer costs can be crippling for a first-time buyer. By contrast, renting generally just requires a month’s security deposit equal to one month’s rent.” This trend is supported by the findings in the FNB Property Barometer in May, which referenced “declining house buying activity, in line with higher borrowing costs [and] stretched affordability….”.
Environmentally savvy
“Rental tenants also benefit from not having to pay property taxes or cover the costs of levies, insurance, security, maintenance, and repairs, and they get access to facilities that they would otherwise not be able to afford – like a heated swimming pool and sundeck, gym facilities, communal gardens and coworking spaces, off-street parking, round-the-clock security, and high-speed Wi-Fi,” says Van Graan.
The increasing awareness of environmental concerns has significantly fuelled the preference for urban apartment living. Millennials are increasingly choosing compact apartments due to their cost-effectiveness and energy efficiency, which surpasses that of suburban houses. Eliminating commuting necessity, whether by proximity to work or the ability to work remotely, is crucial in diminishing their carbon footprint. “Today’s younger tenants are generally well informed and hold the property developer accountable for ethical and sustainable building practices. That’s why energy-efficient lighting and appliances, double-glazing, centralised air-cooling, water harvesting, recycling, and solar power have become standard in many new developments,” Van Graan explains.
Harbour Arch
Urban energy
Exploring the property market landscape reveals a growing inclination towards inner-city living, particularly among the younger generation in cities such as Cape Town. According to a TNP Investor Report published in November 2022, individuals aged 26-30 constitute the most significant demographic residing in the Central Business District (CBD). This demographic is characterised by high educational attainment and relatively robust income levels. Notably, the research underscores that renting surpasses ownership as the prevalent housing arrangement in these areas.
While there are several motivations for renting in city centres, the magnetic appeal of the urban environment itself may be most compelling. Millennials are irresistibly drawn to the vibrant energy and cultural diversity that permeate the inner city. The allure extends to a heightened quality of life, including the ability to commute on foot, engage in outdoor activities, access daily necessities within a short stroll from home, and savour many culinary, cultural, and entertainment experiences right at their doorstep.
Van Graan says, “Since launching the Harbour Arch rental offering in May this year, we’ve seen huge demand from young professionals, digital nomads, and people relocating to Cape Town from elsewhere in the country. Cape Town –recently voted ‘Greatest City on Earth’ by the 2023 Telegraph Travel Awards – has become a desirable playground for young, dynamic, trend-setting individuals looking for sociable, connected, and physically active urban lifestyles.”
Fresh perspectives
Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, says that globally, millennials are infusing the real estate industry with fresh perspectives, innovative ideas, and a commitment to sustainability, inclusivity and technology. Still, South Africa has some catching up to do. “This is partly because there is little earning potential whilst in training, which deters many talented young people who are also battling a rising cost of living and sluggish economy and can’t afford to work without earning a living. This is something we need to address because not only do we need to keep attracting the best people to the industry, we also need millennials’ unique skills and values and their approach to real estate.” According to Geffen, several key strategies can be used to create a real estate landscape that speaks to millennials’ needs.
- Because they are so au fait with digital tech, the real estate industry should prioritise technology integration, offering virtual property tours, online transaction platforms, and user-friendly apps.
- Sustainability is essential. Real estate developers and agents can attract this demographic by showcasing energy-efficient homes, eco-friendly building materials, and properties with green features.
- Millennials appreciate personalised experiences. Based on data analytics that highlights their interests and lifestyle, personalised recommendations can help them connect emotionally with real estate.
- This generation is used to mental multitasking online, so marketing to attract them must be succinct and immediately impactful. Videos often work better.
- Millennials value community and shared experiences, so they look for living spaces that foster connections, such as co-living spaces, communal areas, and access to local amenities. Highlight inclusive neighbourhoods and celebrate cultural diversity to create a welcoming atmosphere.
- Explore shared ownership models that make a property more affordable.
Undoubtedly, long-term property investment remains a wise choice; however, it no longer holds the revered status of ultimate adulthood achievement as it once did. In our interconnected global society, with the ability to travel, work remotely, pivot careers, and explore life in various cities worldwide, a generation has emerged with a different perspective on settling down. For the ambitious, upwardly mobile youth with a spirit of adventure, renting an apartment in or near a city may be the more attractive choice.
