Younger generations’ appetite for property investment

Millennials and the older Gen Zs are the young generations that hold purchasing power. Some of them may have already established their careers, while others are just starting their businesses. Many are likely starting to build a family, buy a new home and invest in their future. And while there are numerous investment instruments in the market, there is one option that may be ideal for a young adult looking for an opportunity that is viable, future-proof and definitely a life goal for many—real estate. The question is, how do we convince them to actually start investing?

In a recent webinar hosted by Inquirer Property in partnership with SM Development Corp., we took a closer look at the two generations that largely represent the group of consumers today, made sense of their preferences and behavior to find out what they are looking for, and help property developers improve their services to better cater to the needs of the two generations.

RESHAPING THE MARKETPLACE

Let’s look at the influence these two have in reshaping the consumer marketplace.

Based on national statistics, millennials and Gen Z constitute around 70 percent of the Philippine population, and between these two groups, about 40 million are part of Gen Z.

These two generations also occupy a huge chunk of today’s workforce.

A study by Icon Executive Asia on the country’s workforce from 2018 to 2021 showed that 50 percent of the respondents are millennials, 44 percent are from Gen X and only 6 percent were Baby Boomers. It also revealed that almost half of the millennial respondents are in middle management with an average monthly salary of P50,000 to P80,000, while some 38 percent of millennials hold positions in senior management with a salary of up to P150,000 a month.

The Gen Zs may be relatively young, but they already have significant spending power at their fingertips. And as more of this generation reach adulthood, you can only imagine the purchasing power they will soon have.

BEHAVIOR AMID THE PANDEMIC

During the webinar, I presented an overview of the consumer behavior of millennials and Gen Z based on our company’s observation and viewership during our live selling events. We observed that three categories are likely to impact their real estate preferences— grocery and food essentials; smart homes and smart appliances; and pet care products.

Considering these categories, we believe that millennials and Gen Zs may likely look for three things when buying or investing in a property—accessibility, technology, and pet-friendliness.

To recall, the im

portance of having your own space as well as the luxury of comfort and convenience were highlighted by the pandemic and lockdowns which limited one’s mobility. Not needing to commute and having better access to supermarkets, drugstores, laundromats, workplaces and other lifestyle needs have thus become essential for younger generations.

As most of us stayed indoors, many had the sudden urge to personalize spaces and equip them with smart devices and appliances to better enjoy that luxury of convenience. Pet parenting has likewise become a coping mechanism for many amid the pandemic, so developers have to make room for these groups’ pets.

MILLENNIALS VS. GEN Z

While others may see these two generations to be alike, there are several differences in the way they buy, according to Salesforce, a customer relationship management (CRM) platform.

Tech-savvy. Millennials may be tech-savvy due to their tech-saturated upbringing, but Gen Z can be considered “tech native” as they grew up in the era of smartphones. While the former can tolerate non-digital processes so long as the service is at par with their expectations, the latter tends to want almost all things digitized. Virtual property tours, automated apartment matching, and digital options for purchasing and leasing are likely to get their attention.

Experience. Ramp up your customer service experience especially for the millennials who are more sensitive to negative experiences. In a survey by Zendesk, 53 percent of millennials were found to likely switch to a company’s competitor after one poor customer service experience. Gen Z is more tolerant as only 34 percent said they would switch. However, Gen Z still wants to talk to helpful support agents. They are just less likely to change brand preferences quickly.

Priorities. Millennials are said to be idealistic; Gen Zs are viewed as pragmatic. “Millennials were raised during an economic boom, while Gen Z grew up during a recession. [Gen Z] has been shaped by the economic pressure that occurred during their childhood years, when their parents and communities may have been struggling with employment and finances.”

While both strive for stability, millennials are more after the purpose and core values of a brand and whether it’s sustainable or eco-friendly. Members of Gen Z are looking to save money and make smart investments. To appeal to both, consider offering deals, benefits, amenities and attractive payment terms that will address their deal breakers.

Trust. Millennials tend to build emotional connections with brands they trust, but Gen Zs look for a sense of belonging in online communities and familiarity with opinion leaders and influencers. Developers must research their market’s priorities, build their brand reputation and align themselves with reputable trendsetters and influencers.

CALL TO INVEST IN REAL ESTATE

Convincing millennials and Gen Z to invest in real estate is not that simple. They might still need more convincing, and so far, we know that they value smart investments and long term value; security; accessibility and inclusion; excellent customer experience and shared services; and individuality.

Make an effort to understand the importance of these five things from the perspective of young adults. Take time to craft solutions that address their dealbreakers by improving your products, offers and services.

The real estate industry can be intimidating. Many fear the first step of investing because they lack the knowledge when it comes to buying or investing in a house, so take time to guide them.

And there are many ways to do so. You can start by coming up with online content that will help them to better understand what the real estate industry is all about. Since these two generations have their phones with them all the time, take advantage of their tech-savviness and reach out to them through the most convenient way possible today—the digital space.