They may have scoffed at ‘savings’ earlier but millennials are likely to turn conservative in terms of spending and saving in the year to come. Real estate pundits predict they are also likely to drive residential sales in 2023 – for the sake of a newfound, post-Covid, financial prudence.
Easy days are gone?
The pandemic taught everyone how they can work from everywhere and suddenly staying at home and creating value became a possibility. Now hybrid work style is offered by most companies. For the location-neutral workforce, a home has begun to make good sense as an investment. Studies across the globe showed the millennials shifting into the home-buying segment even in 2022, a trend that is expected to gather momentum next year.
Housing: The most endurable asset
Anil Pharande, Chairman, Pharande Spaces and President, Credai Pune-Metro told Business Today, “If there is one thing that 2022 proved to the real estate investor, it is that housing is the most enduring and viable asset class in India. After several years of taking a back seat, the residential property became the best possible investment opportunity in the past year. When everyday life gave way to an actual emergency - namely, the Covid-19 pandemic - the bubble of hesitation broke. The pandemic brought the underlying demand for housing to the surface. This is the reason that real estate as an asset class will find growing interest among the millennials who have so far been banking on other instruments for growth. Youngsters will increasingly try and buy their own places in the coming year and then after.”
Millennials already driving growth
House-sale data from various agencies for 2022 saw demand increasing beyond what was witnessed in the last 2-3 decades. In 2021 the desire to buy homes only increased even when the immediate danger was over. Something had fundamentally changed in Indian attitude to homeownership and an influential segment was visible for the first time – the millennials.
Snowball effect in 2023
Property forecast by CREDAI shows that property trends from 2022 in terms of rentals and house sales will multiply next year. Rental demand, which also resurged by over 40 per cent in 2022, will also cause investable homes to sell rapidly. The fact that property prices are climbing quickly now will add another level of urgency to seal deals in 2023.
2023: Home size and design
Because the home-buying impetus will be driven by the millennial customer, the size of the houses and their design will both have to cater to their requirements. Hybrid work and working from home require bigger residential spaces. Contrary to preconceived notions that young people need small houses, youngsters are more likely to go for two or even three-bedroom houses with a view to long-term investment.
Location becomes irrelevant
Being close to the office may not be so important for the young buyer – they can work from anywhere. But it will however be important that they get access to facilities in the societies they live in. They are looking for more than just big flats at lower prices - they also expect quick access to shopping and entertainment. Therefore, investors should choose suburban areas that ensure a great social life and overall convenience.
According to Pharande, millennials are more active, health-conscious, and environmentally aware. Builders should consider health-centric construction to appeal to this emerging segment. Thus, a jogging track, a properly equipped gymnasium, a swimming pool and clubhouse, and facilities for other sports activities become imperative. India currently has over 400 million millennials, and they are likely to push the housing market in the coming years.
As per Anarock Research, more than 6.30 lakh units are available for sale across the top seven cities as of Q3-2022 end. Of this, the mid-segment homes priced between Rs 40 lakh and Rs 80 lakh have the highest share (of 29 per cent), followed by the premium segment priced between Rs 80 lakh to Rs 1.5 crore with 28 per cent share and the affordable segment (less than Rs 40 lakh) with 27 per cent share. The luxury and ultra-luxury priced above Rs 1.5 crore have nearly 16 per cent share available stock across the top seven cities. Among the cities, MMR has the highest available stock of more than 1.91 lakh units, followed by NCR with nearly 1.33 lakh units.
Renting is a thing of past
Prashin Jhobalia, VP of Marketing Strategy, House of Hiranandani told Business Today "The global economic impact of the pandemic has changed the millennial generation's preference for renting over buying homes. As a result, demand for property purchases among millennials aged 30 to 40 has increased significantly. Millennials prefer luxury and lavish lifestyles; thus, they look forward to buying luxury homes that meet their comfort and luxury requirements. The Purchasing capacity of millennials has gone up in the past decade, thereby boosting the demand for luxury housing.”
Good news overall
“Post the pandemic, home buying sentiments have become stronger, with millennials being the dominant segment. We believe this trend will continue to hold sway for the next few years as the residential sector has become more end-user-driven instead of investment-driven. As inflation stabilises, we believe the RBI’s monetary tightening cycle will soon come to an end, which would further boost sales in this sector. We expect mid-end and budget segments will still garner a dominant share in sales,” Anshuman Magazine, Chairman and CEO - India, South-East Asia, Middle East andAfrica, CBRE told Business Today.
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