Indian Millennial Homebuyers: The Times Are Changing
Everything that your parents may have communicated to you about owning a home may be incorrect if you are a millennial under the age of 35. However, don't blame yourself for this - your parents operated by a rigid set of values that they have simply passed on to you. It was a simple enough formula - get a good education, get married, have kids and buy a big flat in the city. This is - or was - the quintessential Indian middle-class dream.
This dream - and the formula - may continue to have relevance to quite a few younger people in India, but the way life works for today's millennials in India is no longer so cut and dried as it was for their parents. In the first place, we have a rapidly evolving and increasingly competitive job market in India.
The career charts of Indian millennials are no longer as predictable as those of their parents were - nor does a sound college education mean that one can actually get the best jobs anymore. Also, millennials are the 'job hopping' generation which wants to sample different lines of work and also different companies with varied work cultures before they 'settle down.' This is one reason why many Indian millennials initially prefer to rent rather than buy their homes.
Secondly, because their careers are no longer cast in the concrete of limited options like engineer, doctor, lawyer, banker or 'Government job, young Indians today are marrying later and are not necessarily in a hurry to have children once they do, either. When they do decide on having children, having one child is, more often than not, enough. The typical millennial family of today is essentially nuclear and does not subscribe to the values that drove the much larger and much more complex joint family package.
They are more flexible and value their freedom, so they are not overly invested in making heavy financial commitments as soon as they are able to (making such commitments was a defining factor of the previous generations of Indians).
What does this mean in terms of their home purchase decisions? For one thing, it means that a smaller flat - even for a dual-income household - is perfectly adequate to begin with. What increasingly matters for the young, smart socially conscious Indian nuclear family of today is not necessarily size, but:
· Value for money (banks and developers should understand by now that dual income does not equal dual gullibility)
· Being able to get to and from work conveniently (not because getting to work fast matters most, but because getting home faster leads to better work-life balance)
· Good public transport connectivity (because using public transport is good for the family budget as well as the environment)
· Two car parking spaces (because two earning members may need to be as mobile as possible)
· Fast broadband + Wi-Fi connectivity and other smart home features (because many Indian millennials can and do work from home, or from home as well as an office)
· Environmental sustainability of the project (because most Indian millennials do believe that the world can become a better place)
Upgrading to larger homes should be an option, but it is by no means the only acceptable path for the Indian millennial to follow. For the previous generations, the 'upgradation' route was more or less socially enforced - but that trend is now history.
Strangely, many residential developers in cities like Pune have not caught on to the reasons why their projects are not selling as fast as they used to. They choose to believe that it is because 'market conditions' are currently 'slow'. That may be true, but the larger fact is that housing projects that appealed to their parents may not have the same attractiveness for today's millennials.
Projects that do not meet the requirements of today's younger generation of working professionals are not going to work for this buyer segment, regardless of the market conditions.
One truth about the real estate market has not changed, even for millennials - while it is not all about 'location, location, location' for them, location is still certainly very important. It's just that 'central location' is no longer the Golden Rule - Indian millennials are far more inclined to purchase their first homes in the suburbs, not in the city centre.
They are also far more likely to buy homes in organized townships with stand- alone infrastructure and their own schools, healthcare and shopping / entertainment facilities. Townships with their own office complexes offering potential walk-to-work or cycle-to-work possibilities and those close to major employment hubs such as IT parks and manufacturing belts are the most preferred.
By Anil Pharande, Chairman - Pharande Spaces