Why mil­len­ni­als dis­like re­alty

Mil­len­ni­als are more aware of the dif­fer­ent kinds of fi­nan­cial as­sets

Hindustan Times (Patiala) - - Region - Ash­wini Ku­mar Sharma ash­wini.s@htlive.com

The young on-the-move mil­len­ni­als hate to be tied down by a house or home loan EMIs and would rather in­vest in fi­nan­cial as­sets like eq­uity, thanks to the new Uber-rent mind­set and more aware­ness about ser­vices and op­por­tu­ni­ties in the mar­ket

Among all the as­sets, a house is typ­i­cally the lead­ing pa­ram­e­ter by which a per­son’s suc­cess is mea­sured, es­pe­cially in In­dia. “An­tilia”, the house where In­dia’s rich­est per­son Mukesh Am­bani lives is deemed to be the world’s most ex­pen­sive res­i­den­tial prop­erty owned by an in­di­vid­ual. If you type Am­bani on Google, the first op­tion that the search engine au­to­mat­i­cally sug­gests is “Am­bani House”, which shows peo­ple are in­ter­ested to know about it more than any­thing else as­so­ci­ated with Am­bani, who is the chair­man of Re­liance In­dus­tries Ltd.

How­ever, the way young mil­len­ni­als look at real es­tate is dif­fer­ent from how the ear­lier gen­er­a­tion used to re­gard this as­set. In fact, they seem to be shift­ing to fi­nan­cial as­sets.

So what is the mind­set aid­ing this tran­si­tion? Is it the Uber-rent mind­set of not hav­ing to own any­thing but en­joy­ing the same comforts? Here are five rea­sons why mil­len­ni­als don’t like real es­tate.

MORE AWARE­NESS

Com­pared to the ear­lier gen­er­a­tion, there is more aware­ness among mil­len­ni­als about dif­fer­ent fi­nan­cial as­sets. “There is aware­ness to­wards fi­nan­cial as­sets and the shift from real es­tate to eq­uity in­vest­ments is hap­pen­ing,” said Lo­vaii Navlakhi, man­ag­ing di­rec­tor and CEO, In­ter­na­tional Money Mat­ters, a fi­nan­cial plan­ning firm.

Some ex­perts be­lieve that the shift is hap­pen­ing based on the source of in­for­ma­tion and what mo­ti­vates mil­len­ni­als to make an 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.

MIL­LEN­NI­ALS ARE WILL­ING TO IN­VEST IN RISKIER AV­ENUES COM­PARED TO EAR­LIER GENERATIONS

MINT/FILE

The way mil­len­ni­als look at real es­tate is dif­fer­ent from how the ear­lier gen­er­a­tion used to.

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