The growing Indian rental sector is also overwhelmingly urban, with up to $14 billion of the market concentrated in urban centres
While many of us still associate homeownership with success, stability and status, millennials’thoughts on homeownership can be more aptly summed up as unnecessary, inflexible and unaffordable. While increasing the supply of affordable housing represents one way in which “generation rent” can be helped onto the housing ladder, the increasing popularity of rental housing is unstoppable and housing developers need to be ready to adapt to this sectoral transformation.
The scale of this trend should not be underestimated. While approximately 60 per cent of baby boomers – those born between 1946 and 1965 – owned their own home by the age of 30, decades of falling housebuilding and rising house prices have reduced home ownership for subsequent generations, with less than 40 per cent of today’s millennial generation owning their own home at 30.
The demise of homeownership is not just a response to rising house prices, either. In recent years, there has been a cultural shift in the way we want to live. In an age where we stream our music rather than buy CDs and order an Uber rather than buy a car, the responsibilities and risks of buying a home is also losing its appeal. Additionally, unlike previous generations, who were content with living in the same house for thirty years or more, young professionals also want the freedom to live and work whenever is best at a given time, and to easily move on when opportunities arise elsewhere. For millennials, rental housing is not only an economic necessity, but also provides the flexibility and convenience to complement their increasingly nomadic lifestyles.
India is no exception to this trend, with the nation’s residential sector now worth $20 billion. Can housing developers focused on sales capitalise on this growing appetite for rental housing? The hotel sector can provide some valuable lessons in this regard. Like hotels, rental housing will increasingly have to compete with regard to convenience and amenities. Real estate developers across the globe have already begun to capitalise on this trend.