Millennials have become a major source of spending power, and their rising influence is rapidly turning the tide in consumption trends around the globe, with the real estate market being no exception.

CBRE's survey of young adults across the Asia Pacific region shows that finding affordable but practical condominiums as a housing choice is the answer for this value-concerned generation.

"Practical" means an efficient use of space that maximises utility, comfort and convenience. Until millennials can find condominiums that meet their requirements, renting condominiums will become the preferred option for this generation.

The term "millennial" refers to those born between the 1980s to 2000. Millennials have grown up during the age of globalisation and rapid technological advancement, making their consumption behaviour starkly different from that of previous generations. In Thailand, millennials represent about one-third of the workforce.

Despite being known to have a great deal of independence, millennials show the lowest rate of property ownership compared to other generations.

Around 50% of millennials in the Asia-Pacific region still live in family homes, where nearly one-fifth of those surveyed don't have plans to move out.

This gives the false impression that millennials are reluctant to take on the responsibility and commitment of property ownership. However, they aspire to own property as much as their predecessors, and 65% of them say that they are saving money for a future housing purchase.

The key factor preventing millennials from purchasing their own homes is the challenge of finding affordable housing. The financial burden that comes with purchasing a property is the main reason this generation still opt to reside with their parents.

Many who decide to move out are forced to rent a property or must rely on financial assistance from their family to afford their housing accommodation.

Traditionally,  a very high level of homeownership has always been a trend in Thailand, with over 80% of households owning their own property, but very few young Thais can afford the price of traditional housing in Greater Bangkok where the median house price is nine times the annual average household income in 2017.

Low affordability has turned millennials' attention to the possibility of residing in condominiums. The option for a condominium purchase is a popular alternative as condominiums are smaller, hence a lower lump-sum price. In Bangkok, a one-bedroom condominium could cost half the price of a single-detached house.

The lower prices alone are not enough, as there are other factors that affect millennials' decisions when making a purchase.

The survey reveals that millennials are unwilling to compromise their living standards for cheaper products. The selective and value-concerned generation are more willing to wait and refrain from purchasing a property until they can find one that meets their standards in terms of location and quality.

Given their preferences, developers should take heed of these trends by offering smaller, affordable and practical condominium units with good amenities and accessibility.

Leasehold condominiums have the potential of being a lucrative choice since they command a lower price than freehold units do for a comparable project.

While affordability is still an issue, this will reduce the total cost. It should not be a problem for people willing to buy leasehold condominiums but the longest lease in Thailand is 30 years. There are also still negative perceptions about temporary ownership and the depreciating nature of leasehold property where it is worth nothing to the leaseholder at the expiry of the lease, as well as difficulty in obtaining mortgage finance.

If you cannot afford to buy freehold and are not willing to spend on a 30-year lease, the only option is to stay at home with your family or rent.

While Bangkok currently has a small population of millennials renting, the expansion of mass transportation system makes the option of renting cheap condominiums outside the downtown area and commuting to work much more viable.

CBRE foresaw a growing share of millennials renting condominiums, unlike in the past, when condominium renting was largely confined to expats only. In any case, the rental budgets for Thai tenants will be much lower than those of most expatriates.

Chotika Tungsirisurp is associate director and Charit Setsuwan is analyst at CBRE Research & Consulting, CBRE Thailand. They can be reached at bangkok@cbre.co.th Facebook: CBRE.Thailand Twitter: @CBREThailand LinkedIn: CBRE Thailand website: www.cbre.co.th