Good performance within the real estate market in 2023 will undoubtedly come from the rental market. While those solely dedicated to home sales, which is an ongoing challenge given the fact that recovery from Covid is still in play via vehicles such as inflation and interest rate, those with a rental portfolio can expect a relatively good year … but that is conditional!
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Conditional on the basis of interpreting the needs in the market. For example, TPN Credit Bureau says that in Q2 last year, 54% of rentals were in the region of R3000 to R7000 per month. This is pertinent when talking about GenZ and their renting patterns because it is within this demographic that we are seeing some emerging trends, including that of sharing a rental property, which allows two individuals to explore and share the costs of a higher-quality rental.
This is good news for owners of rental properties in this range, as they will potentially be able to charge more in such a shared scheme. However, if this is the market - both GenZ and shared rental - that owners wish to target, they do need some understanding of the ‘new’ needs of millennials. This market has changed somewhat post-Covid, particularly those that work from home or split their time between the office and home.
Understanding the GenZ market today
This group is ultimately seeking life-balance mobility, given the events of the past three years. However, a one-size-fits-all mentality isn’t where they would like to be positioned because of their need to be recognised individually. This makes determining their needs somewhat difficult, yet there are some particular factors that are generic and relative to a rental property:
Eco-friendly attitude
GenZ is driven to explore how their capabilities can make an impact and create a sustainable influence, particularly regarding environmental concerns and an eco-friendly lifestyle.
Rental property needs:
Should not be near pylons or other environmental hazards, either real or perceived threats.
Property should offer recycling bins.
Energy-efficient appliances and LED lighting.
Open floor plans with a good flow of natural air and light.
Prefer natural, even luxurious features like hardwood floors, indigenous gardens, and a property that has been constructed in a manner that is least harmful to the environment. (GenZ prefer quality finishes more than any other generation).
- A private, exclusive outdoor area, such as a courtyard or patio, garden or balcony.
Digital communication
GenZ is heavily dependent on social media for communication and engagement with others, preferring texting as a primary form of communication, and can be quite demanding in expecting an immediate response to queries.
Rental property needs:
Smart home tech is a bonus.
Excellent uncapped high-speed wi-fi connectivity that is included in the rent costs.
Preferred comms with the landlord is by text.
Alternative power source that is not harmful to the environment, such as solar.
Ability to pay rent online.
Quick turnaround on approval to rent by landlord.
May undertake online research (if available) or request information about previous tenants to obtain a testimonial about the landlord and rental property.
Wants as much of the rental contract process to be digital, inclusive of application, credit check and payment plans.
Prefers access to online video content rather than television - consider a YouTube subscription.
Will seek properties across social media platforms and undertake web searches.
Work environment
Hybrid work environments are favoured, as are online purchases and trendy neighbourhoods.
Rental property needs:
Needs a separate office or place for dedicated working.
Stability of wi-fi connectivity; even better if an alternative source of power is available, such as solar.
Needs the property to be lock-up-and-go and accessible anytime during a 24-hour cycle.
Needs off-street parking and possibly parking for one visitor car.
Neighbourhood that offers deliveries.
Culturally diverse and outdoor-friendly neighbourhoods Rental property needs:
Enjoy trendy suburbs with a large offering of restaurants and takeaway outlets.
Walkability of neighbourhoods and nearby entertainment facilities, inclusive of night events.
Gyms and health/fitness clubs, natural green spaces, as well as cycle paths and local outdoor get-togethers.
Enjoy arts, local culture and a mix of nationalities.
There are indications that GenZ enjoys having pets, so a pet-friendly environment is a bonus.
Frugal and entrepreneurial
Rental property needs:
Lower price points are attractive, which allows for the ability to save money.
Seeking properties that provide communal workspaces and potentially may be able to operate a small business from the home base.
Fickle in property
GenZ is quick to ‘jump ship’ when disliking factors beyond their control.
Rental property needs:
Landlords should not change the status quo of the rental contract without fair warning.
Problems should be solved immediately or timeously and in consultation.
External noise factors are a negative, such as the excessive barking of dogs in the neighbourhood.
While GenZ’s financial power may be currently limited, but as it grows in forthcoming years, this demographic will be shaping the renter of the future: one that is highly tech-savvy, very research-focused, quality-demanding, and confident.
Writer : Kerry Dimmer
