Rental residential developer Homa is planning to spend 10 billion baht to build or acquire 5,000 rental units in Thailand, Indonesia, Vietnam and the Philippines over the next five years to capitalise on the trend among younger generations of consumers who prefer renting to owning a property.
Founder and managing director Luca Dotti said the definition of a home was shifting away from a place of long-term permanence, as newer generations prefer to invest more in experiences than a static way of life.
"Younger generations of consumers are seeking a new meaning for living. They're looking for more than just a place of comfort, but also a sense of community," he said.
"We forecast the shift from ownership to renting will solidify globally in the coming decades."
OWNERSHIP WANING
According to the US Census Bureau, home ownership rates are projected to decline across future generations.
Mr Dotti says the younger generation is seeking a new meaning for living.
The home ownership rate was 77.8% for the Silent Generation (born 1928-1945) and Baby Boomers (born 1946-1964), but drops to 69% among Generation X (born 1965-1980).
Among Millennials (born 1981-1996), home ownership rates tallied 47.9%, while Generation Z (born 1997-2012) and Alpha (born 2013-2025) declined to 30.4% and 15%, respectively.
"Houses for older generations are a symbol of adulthood," said Mr Dotti.
"For the newer generations, renting and non-ownership provide flexibility. They want to live in the moment rather than achieve milestones."
Amid an increase in housing prices, younger people still want to live independently of their parents, he said.
They seek to live in multiple locations that offer a community experience, said Mr Dotti.
"The trend of younger generations engaging with community members emerged during the pandemic, driven by the shift to remote work," he said. "The population of digital nomads grew by 112% between 2019 and 2021."
Moreover, 65% of digital nomads intend to work permanently from co-working spaces or hotels. This trend has created opportunities for emerging businesses providing residential solutions, Mr Dotti said.
ACCOMMODATION OPTIONS
He said the growth of the sharing economy has become more prevalent in steering consumers' preference for renting.
This aligns with an increasing interest in living in connected communities, more flexible living conditions, and being more sustainable.
"Our properties offer a range of on-site services and activities for short- and long-term rent at an affordable price," said Mr Dotti. "Residents can get the privacy they need, while it is easy to access the community when they want."
Regular community activities include yoga and fitness classes, workshops and social gatherings, which can be scheduled via a mobile guest app used to communicate to guests the property's latest news and announcements.
When renting a condo, tenants need to cover the monthly rent, the cost of electricity and water, WiFi, weekly housekeeping, drinking water and, in some cases, parking fees.
Homa facilities cover all these expenses, apart from the electricity bill, in the monthly rent.
Each property comes with a kitchen, bed sheets and towels, and is equipped with staff 24/7 to provide services similar to those offered in a hotel.
"Offering a redefined rental experience, our focus on community, affordability, sustainability and technology are designed to meet changing housing needs where flexibility, mobility and experiences are highly valued," he said.
ISLAND ORIGINS
The roots of Homa's portfolio lie in Phuket with the development of Homa Phuket Town, involving an investment of 1.41 billion baht.
The project, comprising 505 rooms measuring 36 square metres, opened in the fourth quarter of 2021. The rental rate at Homa Phuket Town is 17,000 baht per month.
The company's second property, Homa Si Racha in Chon Buri, required the renovation of an existing serviced apartment at a cost of 371 million baht.
The 100-room project opened at the end of last year, with rooms measuring 64-120 sq m at a rental rate of up to 65,000 baht per month.
"The tenant profiles at these two properties are different. In Phuket, there are 45 different nationalities, but mostly French, German and American nationals," said Mr Dotti.
"In Sri Racha, the majority of tenants are Japanese. The occupancy rate is 60% as most of them are long-stay executives."
As the average occupancy rate in Phuket has reached 87%, Homa is expanding through two additional properties located in Cherngtalay and Chalong Bay, with 423 units and 104 units, respectively.
Representing a 1.5-billion-baht investment, the Cherngtalay site is set to open in January 2024.
The company plans to invest 479 million baht in the Chalong Bay property, which is scheduled to launch in the first quarter of 2025.
DEVELOPMENT PLANS
He said Bangkok is the company's next destination, with five projects planned in the capital and around 1,800 rooms in total.
Four of these projects are renovations of existing serviced apartments, with the other a new development.
"In Bangkok, access to mass transport is key, with a walkable distance of around 400-500 metres," said Mr Dotti. "The scale should be feasible."
To capitalise on strong demand in the Eastern Economic Corridor, the company plans to develop a 496-room apartment building in Rayong and is considering developing a low-rise housing project for rent in Pattaya.
Homa wants to expand in Southeast Asia over the next few years, spreading to Indonesia, Vietnam and the Philippines. The company expects to have 1,500 rooms in total.
Founded in 2018, Homa is a joint venture between Asia Capital Real Estate (ACRE) and Noon Capital.
ACRE is a global real estate private equity firm managing capital for institutional and family office investors through a series of private equity and debt funds.
The firm has roughly US$4 billion in assets under management in the US, the UK and Southeast Asia.
Noon is a vertically integrated property developer and manager with a track record within the residential and hospitality sectors in Thailand. Founded in 2013, it has completed seven projects with a total of 1,300 rooms.
