The real estate industry is keeping a close eye on the millennial home buyer’s preference, as it is going to shape the real estate market’s growth considerably.
By Amit Goyal
Millennials have been known to be famously commitment-shy the world over. A trait that was most evident in their real estate investing preferences. Till a couple of years ago, millennials weren’t rushing to buy homes – as they professed undying love for their on-the-move lifestyles, chasing jobs across the globe. But the pandemic has now queered the pitch for good and millennials are now racing ahead, buying multimillion-dollar homes across the globe. So, who are these young ones, and what are they buying in India?
Millennials are buying homes everywhere
Who are millennials? Pew Research described “millennial” as a person born between 1981 and 1996. According to a report by Investment banker Morgan Stanley, this segment is today a force to reckon with, in India’s financial success and economic growth. People in this age group make up for almost half of India’s workforce and contribute to 70% of national household income with a combined spending capacity of $3.6 billion.
In real estate though, millennials are only now beginning to be recognised as one of the most influential consumer groups. In the US, as per a survey by the National Association of Realtors, 38% of millennials own homes now. And huge, luxurious ones, at that, going by Sotheby’s International Realty data – which shows modest properties are being bypassed by the millennials for luxury homes. The result of this trend is that world over, millennials are becoming a force to notice in the high-end real estate, which usually focuses on the traditionally rich seniors.
“Baby boomers are retiring to sunnier locales, while remote work has allowed millennials to ascend the housing ladder in smaller, more affordable cities,” quotes this latest 2021 global luxury report by Sotheby’s. It goes on to say that the unique consumer preferences of the millennials have already begun to influence the way the luxury-housing market is building homes – and builders are considering how to integrate high-tech, touchless features into homes and also add green practices and environmentally conscious options such as energy-saving geothermal systems, solar panels and green roofs.
How the coronavirus has changed millennial home buying trends
For starters, the virus has forced young professionals to take a reality check, impacting their mindsets. The pandemic forced them indoors for inordinately long periods of home, making them rethink their homestay options. They now want to buy spacious homes that cater to the varied needs of their families, including that of the home office. It also altered their priorities in a way – with many preferring to invest in luxurious homes rather than opting for foreign vacations to exotic locales. Of course – certain market factors have also helped.
Prices of residential properties have not increased in the last several years. Mortgage levels are at an all-time low and with discretionary expenditure on travel and eating out falling dramatically, people savings have gone up in the pandemic. Some of these factors have only added to the traditional mindset for investing in property for a rainy day and emotional security.
Who are the property-buying millennials in India?
Typically double-income young families, with a pet thrown in somewhere. They are the new-tech crowd or professionals with big salaries, and bigger aspirations – the start-up founders, the stock market wealthy. They have the money and want a lifestyle to match that. They prefer all the comforts of modern living right where they are living – and so, many opt for gated communities.
They love open sculpted spaces, clubhouses, shopping facilities, a gym, tennis courts, walk-parks, even car-charging spots for their additional electric vehicles. It has to be a serene space befitting their status in society, and yet, hassle-free from them having to maintain it themselves. This is backed by the fact that in cities like Bangalore, Hyderabad and the Delhi-NCR region, where most of the tech-rich congregate, there has been a huge spike in luxury residential real estate so far into 2021.
Millennials, a force to watch out for in luxury homes
Millennials, the most educated generation in the history of mankind, flaunting higher earnings and more inheritance value than their fathers and forefathers, have realised during the pandemic that a great home is no longer optional. The more space, amenities and green, the better. So, from kids schooling to zoom spaces within homes, they are considering the locality, accessibility, size – just everything required for a holistic quality of life.
The next obvious question the realty sector needs to address, is it ready to cater to this demand? Millennial buyers are scrutinising the credibility and track record of the developer, the construction stage of the property, the social and retail infrastructure close by, and now – healthcare facilities. So, all these factors are going to impact the potential value of the property in the coming year. They are opting for larger spaces in the city peripheries. That’s why the rush for plotted developments and farmhouses in several top cities of India.
Undoubtedly, the real estate industry is keeping a close eye on the millennial home buyer’s preference, knowing, it’s going to shape the real estate market’s growth considerably. And they will shell out big bucks too, for the right home. According to a Sotheby’s International Realty survey, 63% of real estate players said they expected luxury home prices to rise over the next three years in their respective markets, and over 70% saw added demand for luxury properties in 2021. So, it’s time we began to build and find the homes they are looking for.
(The author is CEO, India Sotheby’s International Realty)