Why millennials dislike realty
DIVERSITY
investment decision. “We find that the shift is happening but it is a very slow process and largely influenced by the person they are seeking advice from. For example, those who are being advised by a parent or individual from a different generation are still likely to continue to favour buying real estate early for both the security of having a ‘roof over the head’ and the tax breaks, whereas those who are taking decisions based on research are focused towards financial assets,” said Vishal Dhawan, founder and CEO, Plan Ahead Wealth Advisors.
Millennials are also open to new ideas. They understand technology better, have more information and tools to compare different investment avenues. “Millennial are smart and do their math. They are willing to try out new things due to the paradigm shift we see in lifestyle products like food delivery, ticket booking apps, etc. Since they are already trying new servi- ces and providers, it becomes that much easier for them to adapt to something new for investing,” said Vyakaranam.
RISK APPETITE
Millennials seem to have a higher risk appetite and seem willing to investment in equity or assets that are riskier than real estate. “They are more aware of market opportunities and are willing to take a risk to be different from their parents. They also consider getting into real estate a burden as it involves a lot of time, research and hence prefers investments which is easy to procure and transact for,” said Nitin B. Vyakaranam, founder and CEO, Artha Yantra.
Mutual funds are considered a risky asset but it’s an avenue which the earlier generation was not so confident about. Substantial and stable growth in assets under management by the mutual fund industry validates this fact. From an AUM of ₹7.5 trillion in August 2009, the industry has moved to over ₹24 trillion in September. Systematic investment plans (SIP) seem to be the preferred way of investment— about ₹7,500 crore flowed into SIPS in July 2018, according to data from the Association of Mutual Funds in India (Amfi).
JOB OPPORTUNITIES
Another factor driving their decision is the kind of job opportunities they have. “The millennials are open to moving cities, countries, and even continents for job satisfaction and good opportunities. Hence, having assets while you are mobile is important for them,” said Navlakhi.
It’s difficult and time consuming to maintain immovable assets like real estate.
“Buying a home is a long-term commitment. If a job requires an individual to travel or work in different cities then buying a home would not be a wise decision,” said Vyakaranam.
Bengaluru-based Varun Bhaskar, 27, a manager at e-commerce company Flipkart, has lived in five different cities in a short span of three years.
“In my first job, I was transferred to four cities in two years, then I got a job in Bengaluru and since the last one year, I am working here, but don’t know about my next assignment,” said Bhaskar.
Like many other millennials, Bhaskar prefers investing in mutual funds and direct equity. Though he doesn’t want to buy a house at present, he plans to buy one for his retirement in his home town, Thrissur, Kerala. “I don’t like living in an apartment, that’s why I would prefer to buy an independent house in my home town,” said Bhaskar.
LIFESTYLE
Not only jobs, there is a vast difference between the lifestyles of millennials and the earlier generation; there are differences in their priorities and satisfaction levels as well.
“Flexibility we believe is the biggest driver for them i.e. not to be tied down to anything they don’t enjoy. For example, they do not want home EMIS to take away their flexibility of taking sabbaticals or going for higher studies or changing their jobs for something that they believe adds more value to them or is in a different geography,” said Dhawan.
UNAFFORDABLE PRICE
Last, but not the least, even those millennials who aspire to buy a house of their own are deterred by high prices. Also, over the last four to five years, real estate has given negative returns in most cases when adjusted with inflation.
That’s being money-wise because even in the next four-five years, experts don’t expect much appreciation in property prices in India.
ILLEGAL COLONIES AND RERA
The RERA provides for an overarching legal framework for the regulation of the real estate sector. The mainstay of the Act is the establishment of a real estate