By Property Soul (guest contributor)
Millennials (not the yellow “minions” in the Despicable Me movie) are also known as Generation Y. The term generally refers to those born between 1982 and 2004 (or who are between 13 to 35 years old).
Every serious industry stakeholder who cares about the future of the property industry must spend some time understanding millennials,because this group will soon become the cornerstone of our society and the main supporter of our economy. As the breadwinner of their family, the millennials are going to be the decision makers of property purchases and the endusers of property products and services.
There are four characteristics of millennials that are going to make a big impact on the property industry.
Trait #1 – Millennials are “digital natives”
The 2016 Zillow Group Consumer Housing Trends Report highlights the fact that millennial buyers and sellers are more likely than any other generation to do their property research online:
– 6 in 10 read online reviews;
– 8 in 10 use mobile apps during their home purchase; and
– 2 out of 3 use online affordability tools and mortgage calculators.
These “digital natives” are forcing developers and property agents to shift from offline to online marketing.Generation Y cares a lot about their own needs and are very expressive. They are also more social media savvy and know how to build their power of influence.
Millennials are also more receptive to digitally-enhanced products, services or experiences, including VR (Virtual Reality), AR (Augmented Reality) or AI (Artificial Intelligence).Recently, Keppel Land used VR technology in their Highline Residences sales gallery. With a VR headset, visitors can visualize the future project, interior of the layout plans, and the vicinity of the condominium in Tiong Bahru.
Apart from doing almost everything online, a popular lifestyle of millennials is to do everything from home. They can socialize, research and shop online without leaving their home. Any vendor that wants to sell anything to the Generation Y has to bring it to them rather than asking them to come and see.
In the future, developers no longer have to spend money to build and maintain a sales gallery for a new launch. Afterall, what’s the point of wasting $2 million to build a showflat, only to have it torn down months later?
Trait #2 – Millennials want to try before they buy
If Baby Boomers and Generation X are interested to buy a new project under construction, just like the latest car model, they don’t mind paying a deposit first followed by loan installments, and wait for the end product to arrive.
But gone are the days that customers are asked to pay for everything in advance. Like buying something with their credit cards, millennials want to get it first, then pay later.They are more comfortable with either a free trial or a first trial at a discount. The magic of trial before purchase is: in case they are not satisfied with the trial experience, they don’t have to stick with the product or service.
Unlike the older generations, millennials prize unique experiences over material possessions.Instead of “Own a luxurious condo in prestigious District X from S$xxx,xxx only”, a future property advertisement will go like this:“Live in a cool condo for a day. Like it? Buy it! Or else, return it.”
Thanks to the cooling measures and Additional Buyer Stamp Duty, more developers are offering deferred payment schemes such as OUE’s Twin Peaks and CapitaLand’s Sky Habitat. CapitaLand is dangling a stay-then-pay program for remaining units at The Interlace and d’Leedon. TG Development also gives potential buyers the option of a two-year lease at their new Somerset project Lloyd Sixtyfive, with a refundable deposit. Some developers try to move penthouses with the stay then pay gimmick, including Frasers Centrepoint’s Soleil @ Sinaran.
Trait #3 – Millennials don’t mind sharing their space
Forget about shoebox units. The new trend of living for millennials in Western countries and Japan is “co-living”.Similar to the concept of co-working, there is a trend of young people in their twenties and thirties staying in serviced residences. The apartments come with studio rooms, with communal spaces, co-working areas, shared kitchens and laundry areas. It offers the communal feel of college dormitories or hostels where young people can mingle with the others and make friends.
To target millennials, CapitaLand’s serviced apartment arm Ascott announced last November the launch of lyf (pronounced “life”), its latest co-living brand. Ascott is planning to build 10,000 units of lyf by 2020 in China, Singapore, Malaysia, Thailand, Indonesia, Australia, France, Germany, Japan and the United Kingdom.
The two major markets are China and Singapore. Future projects include 112-unit lyf Wu Tong Island Shenzhen, 120-unit lyf DDA Dalian and 240-unit lyf Farrer Park Singapore, targeting to be completed by 2018 to 2021.
Trait #4 – Millennials want to live their own life
Millennials think very differently from the Baby Boomers and Generation X. We can get some hints from CBRE Research’s report on Asia Pacific Millennials: Shaping the Future of Real Estate:
– 65% of respondents plan to buy property in the future. However, they will continue to live with their family until they have the financial means to live independently.
– Millennials won’t purchase a home until they can find one that meets their living standards in terms of quality, size and location.
– Home ownership is a priority, but not at the expense of quality of life.
– Millennials like to play. Experiences such as travel, entertainment and dining are lifestyle priorities.
The Y Generation is the “Me Generation”. They are no longer bound by the obligation to make sacrifices for their family. They want to go after their dreams and follow their preferred lifestyle.
The Randstad Employer Brand Research shows that, in Singapore, the average tenure of millennials is typically around two years with the same company. Work-life balance is the second priority after salary when millennials are looking for a job.
How many millennials are willing to be tied down by a 30-year mortgage for a roof over their head? The “live for today” and “live for your dream” mentality of millennials is going to cause a big disruption to the traditional home buying market.