Guest Column: How will Indian millennials shape the course of real estate in future?
Gen Next is knowledge-driven, tech-savvy and influenced by realities like infrastructural development, traffic congestion, crime and security rates and social amenities, all of which will influence home purchases in the future
Ray Brown, the renowned American jazz double bassist, once said the best time to buy a home is always five years ago. The statement clearly underscored the fact that buying a home was a life goal for most, even in America. Unfortunately, Ray’s observation is out of tune with the millennial of today’s America. As another music legend Bob Dylan put it, ‘the times, they are a-changin’. In the US, the millennials are not buying houses or cars or any of the traditional markers of success and affluence. This is the new sharing economy enabled by technology and spurred by brands like Uber and AirBnb and the behaviour we are witnessing is that the new gen is more than happy to rent or to share and not own assets.
Is it the same trend in India?
With 64% of the Indian workforce estimated to be between 20–35 years of age by 2021, the billion-dollar question is, will the Indian millennials not be the next big customer base for real estate?
Millennials are seen to have higher adaptability and transformational attributes in comparison to older generations. If this generalisation is accepted, it can be rationally concluded that millennials across the globe will happily spend their lives in rented homes without undertaking the mega quest for home ownership. And, we are already witnessing this in developed nations.
Indian millennials, however, are seen to think differently. They seem to agree with Ray’s assessment. They are more tuned to the traditional wisdom of building a capital base for themselves by investing in immovable assets and are seen to prioritise home buying as early as possible as a medium of financial and emotional safety. They feel that owning a home unlocks huge value not just in appreciation terms, but also helps save rental costs every month. In general, unlike in the US, they consider stability a major factor in life, something that has rubbed off from the previous generations. The generational shift can be seen by the fact that youngsters are savvier than the previous generation and their home-buying process is driven majorly by deep research and knowledge gathering. They are seen to prefer dealing with reputed and branded real estate developers, who have decent track records in terms of project delivery and quality. They are also not averse to taking a loan to purchase a house as opposed to saving up for it.
So while I have established the behaviour to some extent, let me now talk about why it is a billion or actually a multi-billion-dollar question.
Let’s try and get a sense of the market size. As per a CBRE study, 82% of Indian millennials still live with their parents, Now, out of this, 25% have no intentions to fly the nest, but that means there is still a large majority who will look to build their own homes soon. According to the study, more than 23% of people who are currently living with their parents, will move out within just the next two to five years, making themselves a major target segment for developers.
Reports also predict that 64% of the Indian population will be in the age of 20–35 years of age by the year 2021 which is almost a billion people. And a whopping 65% of them aspire to buy a property without compromising on their lifestyle. The rest 35% also aspire to buy a property for investment purposes. And thus the real estate sector, like all other consumer-driven segments, has to gain more insights into this audience and prepare the right supply to meet this demand.
So what do millennials prefer while buying a property?
As per various studies, they are more likely to choose the following:
Compact and well-designed homes with higher resale value over gargantuan luxury units
Locations with good connectivity and social infrastructure over pricey addresses with higher snob-value
Projects by reputed real estate brands over projects by local/relatively unknown builders
High project security
Availability of ample parking space
Value for money as the key investment driver instead of the lowest-ticket size
Real estate developers will have to start coming up with housing solutions that are tailored to the requirements of this burgeoning property-buying class. Indian millennials are knowledge-driven, tech-savvy and influenced by realities like infrastructural development, traffic congestion, crime and security rates and social amenities, all of which will influence home purchases in the future. Developers neglecting this buying class will do so at their own peril since a large chunk of future end-user and investment purchases are expected to be driven by the same.
It is amusing to see the philosophical contrast as the youth in the West have seemingly moved away from material ownership (maya), while the Indian youth is rooting their identity in materialistic pursuits. However, philosophy’s loss is the real estate industry’s gain, but the industry should be mindful that the future is catching up fast and once these millennials find stability, the next gen will behave like their counterparts in the West.
The author is the Group Chief Marketing Officer, Housing.com, PropTiger.com and Makaan.com
Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.com.
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