Millennials Investing In Real Estate
The millennial generation today is making a significant mark on the economy and is now more eager than ever before to invest in real estate. In the era of globalization, this generation enjoys a purchasing power higher than any of the previous generations. It is not surprising to see that millennials are more aware of the value of real estate as an investment asset.
Millennials are a very important consumer segment for real estate as they are in their peak buying years with easy access to liquidity. This demographic played a very important role in the industry when the sector came out of the pandemic blues and continues to do so. With real estate performing well in the previous year and doing well in the first quarter of 2023, there is a massive expectation that millennials will play a significant role in the journey of real estate growth that is forecasted to cross 1 trillion dollars by 2030 and contribute significantly to the GDP.
Millennials have changed their views of financial success. It is no longer simply about securing long-term employment, moving up the corporate ladder, having comfortable savings or thinking about retirement. Their financial behaviors reflect the challenges of having unstable jobs in the early stages of their career paths, as well as a lack of financial knowledge that prevents them from making appropriate investment decisions. According to a Business Insider Report, significantly more millennials believe that investing in real estate is the way to go.
Purchasing a home is considered essential for saving, but once purchased, it involves significant payments that reduce the ability to save. However, if the home is purchased as an investment, it could generate income from rentals, allowing you to reserve capital and, at the same time, pay off the debt on the property without compromising current sources of income.
Thanks to this, a study by American Modern Insurance Group showed that 86% of millennials aim to become private property owners at some point in their lives, which is generating an increase in the availability of investment options in real estate.
“By having multiple digital tools at their disposal, this generation has a-greater access to information, and to platforms that significantly influence decision making their decisions. So, millennials now use technology, data and advice from experts, three aspects that together allow them to feel confidence and stability at “when it comes to investing for the long term” says Juliana Vasquez, Senior Investment Consultant at Colliers Colombia.
On the other hand, Vasquez emphasized that the retail sector is another excellent opportunity for millennials, as they are new to the world of investments and want to diversify beyond the residential sector.
Millennials are not only interested in making tangible investments, since sometimes their purchasing power can represent a barrier to carrying them out. That’s why in recent years there has been a rise in online investments, such as real estate crowdfunding, which allows this generation to invest in real estate with a smaller initial capital. Another online strategy is real estate titling, which involves raising funds through these platforms.
“Millennials are a generation with significant income inequality. For this reason, they look for two main forces to build financial stability, savings and investment. They do this through tangible assets such as investing or intangible way by investing in the stock market, crowdfunding, funds-investment and shares in cryptocurrencies” explained the spokesperson for Colliers Colombia.
In short, technology plays a crucial role, as intangible investments provide flexibility, diversity and reduced costs. For this generation, investing a small amount of money in a crowdfunded property and enjoying the benefits of returns on their share is very attractive.
“Millennials believe in immediate investment and creating community,” explains Vasquez, Senior Investment Consultant at Colliers Colombia.In this way, taking advantage of available technologies, paths are opened in the field of collaborative investments, investing in large-scale real estate projects, with the aim of finding financial stability.
