Millennials in India are shifting the contours of homeownership with their distinct tastes and values. Learn how they are driving the real estate market.

The monetary investment market has diversified from residential and commercial real estate over the years into many new categories due to rapid urbanization. Individuals invest in the stock market, blockchain and NFTs (Non-Fungible Tokens). Earlier, people migrating to cities like Bangalore would search for rental apartments in Whitefield or "1BHK for rent near me" and see the rents being higher than usual. The high rents and the pandemic slowly changed the perspective of home individuals.

The CBRE's "Live Work Shop" survey with 20,000 participants showed that around 44% were willing to shift into their new home in the upcoming two years. The participant sample size included individuals from all age groups; Baby Boomers (58+ years), Gen X (42 to 57 years), Early Millennials (34 to 41 years), Late Millennials (26 to 33 years), and Gen Z (18 to 25 years). During the research, it was found that 68% of the population lived in rental homes. In metropolitan cities like Bangalore, individuals lived in 1BHK flats for rent in Whitefield, Bangalore Koramangala, BTM Layout and other popular rental localities. The data also showed that 70% of the survey participants, both early and late millennials, wished to own their own homes.

How different Indian demographics look at prospects of investing in real estate in 2023:

Distinct groups of individuals approach real estate investment differently due to their different mindsets.

Baby Boomers: 

The individuals born between the years 1946 to 1964, also known as baby boomers, have a very cautious approach to investing in real estate. They work hard all their life to save enough money to purchase a property, as they think it is a safer and more stable investment compared to gold. It is also a way to diversify their portfolio to generate a passive income via tenant rent. This generation of individuals is focused on income rather than long-term investment horizon. This generation is closer to retirement, and they prefer to have a stable source of income that will add significantly to their post-retirement savings.

Millennials:

This demographic was born between 1981 and 1996. In 2023, they are the larger group keen on residential real estate. Instead of looking for flats for rent in Whitefield in Bangalore or a 2BHK in Bandra in Mumbai, they are looking to invest in homes to acquire long-term wealth. Statistics say that over 43% of the home-buying group are millennials. Around 66% of the millennials state that they purchase as they see it as a long-term investment, while 30% mentioned that social status was also a driving factor in purchasing homes.

Gen Z: 

This demographic born after 1996 are more driven to make smart choices. This group is just beginning or has yet to enter the workforce. The youth would mindlessly spend on things earlier, but in 2023, Gen Z has their priorities set with a roadmap for their future. Despite having yet to be able to invest in property, they have a set plan to make the right investments at the correct timelines in their life. The demographic looking for 1BHK flats for rent in Whitefield, Bangalore or a studio apartment in Worli, Mumbai is strategising how to shift from renting to owning a home while they are still young.

Mindset Shift post-Covid - 71% of Millennials Aim to be Homeowners by 2025:

• The post-pandemic era has changed the millennial perspective of a home. Before the lockdown in the country, people preferred to rent homes and were comfortable with that lifestyle.
• The forecast is that by 2030, the millennial demographic will contribute around 1 trillion dollars, which will, in turn, contribute to GDP.
• During the lockdown, everyone was forced to be isolated in their rental homes, some away from their families. They missed their loved ones and human interaction.
• Before March 2020, individuals would barely be home, as everyone worked from the office. They would spend their entire day at the office and be home only during the evenings and weekends. It was one reason why millennials wanted to avoid purchasing a home in the first place.
• During the pandemic, most millennials were asked to work from home and spend all their time within the four walls. They understood the importance of a space they call home. People started to change their perspective on how the space should be.
• The 71% of millennials who want to own a house by 2025 prefer to payoff the EMI than spend a lot monthly, especially in high-rent cities like Mumbai and Bangalore.
• The statistics state that the Southern part of India in cities like Bangalore and Hyderabad are seeing an increase in interest in millennials seeking to be homeowners.
• Individuals working in the IT, Pharma, electronics, and health sectors who would earlier put their hard-earned money in either a savings account or in the stock market are investing their money in real estate.
• Several Banks are also giving home loans of around 80%-90% depending on the income of the millennial.
• They are seeking properties closer to bus stops and railway stations as they are relatively cheaper. They are also primarily considering localities closer to their work since many have a hybrid work mode. They also want to invest in a home due to family commitments as they wish to spend more quality time with their family.

Millennial Preferences and Home Buying Trends in 2023:

Millennials are searching for a balance between work and personal life. Their preferences while purchasing a home differ slightly from those in their 50s. Millennials are an important segment of the real estate industry. They are in their peak years to invest in real estate with the liquidity and their knowledge about real estate. The residential market in South India has a growing community of millennials keen on being homeowners, especially those living in rental homes. This demographic is now taking advantage of the available home loans, GST, tax exemption, and other benefits. Around 66% of millennials have started investing in residential real estate. The buying trends of millennials in 2023 are as follows:

Community Living:

For the millennials, a home is more than just a commodity. They see home as a place to grow, nurture their true selves and establish stronger relationships with their family and loved ones. After the pandemic, millennials integrate social connectivity into their daily lives. They have started looking for houses in localities with a solid sense of community. They look for residential spaces with co-existing spaces like lounges, communal spaces, clubhouses, and co-working spaces.

Digital connection: 

Thanks to property technology or ProTech, millennials can access worldwide information. They are also digitally inspired by the various features allowing them to access virtual property tours, scheduling meetings digitally and more. When they search for "1BHK for rent near me", many websites and aggregators are immediately brought to their attention at their fingertips. The tech-savvy demographic prefers convenience over anything. Even real estate purchases are now like shopping online.

Green sustainable spaces:

The coming generation of individuals is willing to pay a premium price for a sustainable and healthy lifestyle. The environmental sustainability promised by home builders is not a luxury to them but rather a necessity. They are willing to spend the extra amount for a greener environment without compromising on the amenities. Millennials are shifting towards more ecological sustainability and are willing to pay for it. They believe in a good work-life balance and want a place that aids in improving their mental and physical health by reducing stress.

Facilities, Infrastructure and Location: 

The millennial demographic has become more conscious about their health after the pandemic. Along with beautiful architecture, they wish to have better amenities that aid their physical well-being. Facilities like gyms or workout spaces, a jacuzzi and spa, swimming pools, pathways to go walking or running, and some recreational centres like party halls and a movie theatre in their apartment complex/ gated community has become an essential necessity to look for while purchasing homes.