While Gen Z may encompass those that are relatively young (generally between 18 to 25 years), more and more of them are investing in the real estate market that’s usually the domain of older or seasoned investors. Here are some insights into why this change is taking place.
Market Value img by Nick Youngson via Pix4free.org (CC BY-SA 3.0)
High Income & More Savings
In today’s world, the Gen Z set is enjoying the benefits of not only working in remote locations but also being employed by international companies that can pay relatively high salaries in US dollars; in some countries, the dollar conversion is extremely favourable too which increases the level of disposable income and savings that can be used for investing in real estate. Sri Lanka is an ideal example where young executives can invest in smart apartments from developers like John Keells Properties which are becoming increasingly popular.
Alternative Real Estate Investments
Gen Z is employing means of investing in real estate other than the more traditional methods. One example of this is called “house hacking” whereby a multifamily or single-family house is bought; while the owner sets aside one area as his / her living space, the other parts of the house are divided and rented out. The rent from the other occupants will usually cover a large portion of the monthly mortgage payment too.
Making Use of REITs
Real estate investment trusts or REITs are giving the Gen Z generation a chance to get involved in real estate without physically having to buy or manage a property. A REIT is basically a company which operates, owns, or finances real estate or related assets and one can look to invest in it and reap a share of the profits. Because they are publicly traded like stocks, REITs are highly liquid and easy to invest in as well.
Support from Parents
Interestingly, parental support can also be another reason that has enabled the Gen Z crowd to have opportunities for real estate investments. Quite a number of young people live with their parents (or relatives) even when employed; since food and lodging are covered, their savings are more and can be set aside for investing. Additionally, some parents will help their children by giving loans or making down payments for real estate (like an apartment) which no doubt plays a part in contributing to the trend discussed.
