How Millennials are Leading a Change in the Real Estate Industry
Category Commercial Property News
The term "Millennials" is often used to describe the generation who neared adulthood during the millennium. Generally defined as the era born between 1981 and 1996, millennials are digital natives, fast-paced, inquisitive and critical - and have challenged the status quo across most industries.
Evolving with the ever-changing digital landscape, millennials grew up in an era unlike any other. Global accessibility, easy travel, instant communication and social media have meant that they are spoiled for choice. This has resulted in the emerging generations being extremely discerning with how they spend their time and money, and with whom. It is no longer enough for companies to rely on expensive advertising and branding to capture an audience. Millennials (and the generations impacted by them) are demanding that brands become more socially- and environmentally-aware, ethical and convenient.
How has millennial behavior influenced the real estate industry?
The Millennial profile grows and matures as they steer through their life, from finishing school to entering the workforce to marrying and having kids. According to Statistics SA: In 2019, millennials are between the ages of 23 and 38, and in South Africa alone account for 28,64% of the total population.
Now that the youngest Millenials are adults, their discerning behavior has filtered into all aspects of life - one being the renting, buying and selling of real estate.
Purchasing property has traditionally been viewed as a necessity - a wise investment at any stage of life. Despite this, the Millennial generation has often been overlooked as a key target market for property purchases. According to Lightstone property, just over 300 000 Millennials purchased a house in SA between 2015 and 2017 - of which a third were first time owners.
However, the combination of alternative disruptive investment options such as Bitcoin, remote working and location-freedom, Millennials may question whether real estate is the most advanced way for them to invest their money.
If the unique values, priorities and principled investments of the future are to be determined by Millennials, how do we enhance the real estate industry as an attractive, relevant investment option for the rising generations?
This crowd has already begun to significantly impact the real estate industry in a number of ways:
- Property searches are conducted online. The more information, interactivity and reduced human contact, the better.
- A report recently released by Urban Land Institute and PwC brought light to a movement called "hipsturbia" which is an emerging trend in real estate in 2020. This term refers to denser, mixed-use neighbourhoods in well-situated suburbs near major metros which have become vibrant live/work/play districts.
- Millennials don't want to drive too far out of their city to get things done. Urban staples like dining, shopping, entertainment and jobs, need to all be within a walkable distance.
- They're looking for affordability. Bang for their buck.
- They ask questions. And lots of them: "How will I afford it?"; "Do I want to be trapped by a long-term mortgage?", "Will I still be able to travel?" and "Won't it be better to rent?".
- Millennials are interested in properties, areas, developers and brokers who are concerned with the world's issues like sustainability and renewable energy. This can be contributed to the fact that millennials feel a much higher collective responsibility than previous generations which is driving them to factor social good into their investment decisions rather than solely shareholder profit.
Ben Hatchwell at Office Place says that development projects that are more community-orientated and focus on being eco-friendly with sustainable practices are likely to be more popular investment channels for this generation.
What will the real estate market look like in 10 years from now?
The last decade saw a huge disruption in how the real estate industry does business. Homes were sold online for the first time, property valuations were calculated by algorithms and large listing portals replaced traditional advertising.
The rise of PropTech is starting to disrupt the real estate industry; although actual property innovation has been fairly limited in comparison with other industries. This is going to have to change.
The rising generations look for properties that embrace technology. Things like digitization, connectivity, sustainability, advanced automation in the buying process, security and home management systems will drive decision making.
Hatchwell adds, "With new generations entering the industry we are excited to see what the next decade has in store and we look forward to revolutionising our business every day."
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