Millennials: The Next Super Investors

Millennials are now a force to be reckoned with in the property market, and despite the economic slowdown due to the pandemic, their interest in real estate investing is growing.

Snapshot: Excerpt from recent CBRE report into Asia Pacific Millennials

Who are these millennials, also known as the Generation Y segment? They were born between 1981 and 1996. According to a Statista survey, 70 percent of the global workforce last year was comprised equally by Gen X (born between 1965 and 1980 ) and Gen Y. Forecasts however suggest that the Gen Z (born between 1996 and 2015) will make up nearly a quarter of the workforce as they start to enter adulthood.

According to an article written by online newsletter Brink, “one-fourth of the Asia-Pacific workforce is made up of millennials, representing an estimated $1.1 trillion in buying power in 2020, making this demographic one of the most important consumer bases in the region”.

Similar socio-economic mindset

In the Philippines, most millennials are fully employed. Typically, the younger set occupies supervisory to middle level-income jobs, while the older ones are ensconced in the senior manager level category (director or vice president position).

Many of them are still single and reside with their parents but for the unmarried 30-something millennial, independent city living has become an aspiration.

Millennials are a diverse group but they all share similar socio-economic mindsets when it comes to homebuying. The elder millennials are well into adulthood.

On average, a big chunk (more than 70 percent) of my MBA students at the Ateneo Graduate School of Business are millennials. They are financially prudent and half of this segment have expressed their desire to eventually invest in a home. Many are still single but they are saving money so they can purchase their dream condo that’s conveniently closer to their places of work.

If Gen X has the three C’s (cash, condo and club membership), Gen Y is bent on having the two C’s (cash and condo), especially with pre-developed home prices and terms of payment practically within reach.

Admittedly, the surge in demand for residential purchases for more than a decade was disrupted by the pandemic and despite soaring unemployment that peaked in the fourth quarter of 2020, middle and senior level Gen Y executives are still optimistic about their long-term future.

Influencing the purchase decision

A digital-first generation, millennials rely heavily on social media to share content with their peers, promote the things they adore and get closer and personal with their favorite brands.

For property developers wanting to influence the purchase decisions of a millennial audience, social media provides you with limitless opportunities to do just that.

Millennials coming from a middle-income family tend to get a helping hand from parents eager to make sure that their children are secured with their first ever major investment—the purchase of real estate.

This practice of parents providing financial support and credit guarantees so their adult child can finally purchase a condo unit represents more than 60 percent of all homebuying purchases.

A typical millennial would usually shell out anywhere from P3 million to P7 million and their preferred locations in Metro Manila would be Makati, Bonifacio Global City, Taguig and Ortigas.

For Cebu, the hands-down favorites are the Ayala developments at the IT Park. In Iloilo, the preferred destination is the Megaworld township development, Iloilo Business Park.

‘Superior investors’

But developers must take note that there is also a category of high-net-worth (HNW) millennials coming from second generation business families or successful startup entrepreneurs and investors who have made a fortune and can now afford to invest and venture in high ticket properties.

We refer to them as super investors and they are savvy in many respects with excess money to spare for as long as these real estate purchases ranging from P10 million to P80 million would provide attractive yields.

This segment is something developers should cast an eye on. Pre-pandemic sales of condominiums were primarily driven by overseas millennials coming from China and these pent up demand fueled price surges in the Bay Area traversing the cities of Parañaque, Pasay and all the way to Manila.

With the slowdown of overseas investors, developers must now creatively establish a solid plan to lure this local yet powerful segment.

The real challenge for developers is all about creating a powerful differentiation on their products.

To shift the share of mind to share of heart to share of wallet, products must be compellingly and emotionally different.

Source: Inquirer.net

Bamboo could help solve construction's sustainability problem

Searching for new ways to build sustainable homes, Earl Forlales decided to look not into the future, but to the past.

His grandparents, like generations of Filipinos, lived in a "Bahay Kubo" -- a traditional, boxy, single-story bamboo hut on stilts, indigenous to the Philippines. "Filipinos have been using bamboo (for housing) even before colonial times, for thousands of years," he says.

Strong and flexible, bamboo is one of the fastest-growing plants in the world: while soft and hard woods can take between 40 and 150 years to mature, bamboo is ready to harvest in as little as three years. When treated and engineered, it can last for decades. Realizing the Bahay Kubo could be adapted to create a contemporary home, Forlales began designing his own bamboo houses.

After winning the "Cities for our Future" challenge run by the UK's Royal Institution of Chartered Surveyors in 2018, the materials engineering graduate turned his idea into a company, co-founding Cubo in 2019.

The company launched production of its prefabricated homes in November 2020. The structures can be assembled in just a few days and are predicted to last up to 50 years, says Forlales. He hopes that Cubo's modular designs and use of bamboo can "help accelerate sustainable building" while also providing affordable housing solutions for the Philippines' housing crisis.

A contemporary cube house

Cubo's bamboo homes incorporate many aspects of the traditional "Bahay Kubo" including a raised foundation and louvers, a type of window blind that allows natural ventilation and light.

But Cubo has given the bamboo hut a 21st-century upgrade, including modern light fittings and impact-proof polycarbonate windows. The Philippines is prone to earthquakes and typhoons, so the homes have been designed with natural disasters in mind. Metal "typhoon ties" are used as connectors between the walls, roof and floor panels, and the homes are further reinforced with poured concrete foundations, which replace the traditional stilts. While this gives the structures a solid base, concrete contributes to climate change. Forlales says the company is "exploring alternative foundation systems to further make our offering more sustainable" but this is still in the research stage.

The company's first project was tested very quickly — in December 2020, just days after the first two homes were constructed, the region was hit by a magnitude six earthquake. Cubo's houses survived unscathed.

Cubo offers four different models, sleeping up to six residents. Each house is made to order and can be customized to include elements such as solar panels on the roof, further reducing the running costs and the carbon footprint of its residents.

The company is currently producing six houses per month, but Forlales says demand is much higher and he's hoping to increase supply.

"Filipinos warmly welcomed the product, because it's very familiar," he says. "They realized that it's an intuitive evolution for our local bamboo houses."

Bamboo building boom

The construction industry has been heavily criticized in recent years for its environmental impact. The use of materials like steel and concrete are significant contributors to greenhouse gas emissions, while the extraction of raw resources including stone, rock and gravel degrades landscapes and soils. This has prompted a search for more eco-friendly alternatives.

Cubo isn't the only company to see the potential of bamboo as a strong, sustainable building material. Vietnamese studio Vo Trong Nghia Architects has used bamboo for many of its projects, including the Casamia Community House in the Casamia Resort in Hoi An, while Shenzhen-based Zuo Studio created bamboo pavilions for the Taichung Flora Exposition in Taiwan.

We've been using the same bricks for over 5,000 years. This engineer says it's time for a change.

In Bali, Indonesia, architecture company Ibuku specializes in intricate, large-scale bamboo 'buildings'. Since 2007, Ibuku has built over 60 bamboo structures, including the Green Village, a sustainable community of 12 luxury villas and the Green School, which has a wall-free campus set in nature.

While bamboo has been used to build small structures for thousands of years, "it's only now that we have safe, natural treatment solutions that we can consider building multi-story buildings," says Elora Hardy, founder and creative director of Ibuku. While most of her projects use treated bamboo in its natural form, she adds that with advances in engineered bamboo, there could be "skyscrapers and even whole cities that can be built out of bamboo" in the future.

Engineered bamboo entered mainstream construction in the late 20th century, according to Bhavna Sharma, assistant professor of architecture at the University of Southern California and a member of the task force developing international standards for bamboo construction materials.

"Standards for mechanical testing of engineered bamboo materials are currently being developed; however, areas such as fire performance require extensive study," says Sharma.

As a strong, fast-growing, and renewable material, bamboo could supplement sustainably harvested hardwoods, says Sharma, with the added benefit of bamboo plantations helping to restore degraded soil and land.

Helping out a housing crisis

While sustainability is bamboo's primary advantage, it's not the only reason Cubo is looking to the fast-growing grass as an alternative building material.

The Philippines is currently facing a severe housing shortage, with an estimated 4.5 million people living homeless in 2021, and a deficit of affordable homes.

Cubo's homes cost between 649,800 Philippine pesos ($12,900) to 1.8 million Philippine pesos ($35,738) -- which is roughly comparable to mid-range homes built with conventional materials, says Forlales.

However, he aims to bring prices down by streamlining production and increasing automation in the workshop. The company has also introduced a payment plan, to help reduce upfront costs for buyers.

With bamboo naturally growing throughout Asia, each country has "their own species of bamboo that you can use for construction," says Forlales -- creating potential to build cube houses beyond the Philippines, too.

"Around Asia we have millions of square kilometers that are planted with bamboo. So it's just a matter of tapping into other markets where you can get it," he adds.

source: CNN

Can Your Relationship Handle Buying a Home?

As more millennials and Gen Xers enter the housing market, it is an exciting yet stressful time, especially for those buying a house with their significant other.

In fact, LendingHome, the largest, fastest-growing mortgage marketplace lender, today revealed new survey data showing that 60 percent of millennial and Gen X couples disagreed occasionally, frequently, or “a lot” when buying a house with their partner or spouse.

Couples may be able to more harmoniously navigate the homebuying process by being together longer before jumping into the housing market.

The data shows that couples together for 5-plus years disagreed frequently or more only 14 percent of the time when searching for a home. In contrast, couples together for four years or less disagreed twice as much with nearly 30 percent disagreeing frequently or more.

Fear of Debt Top Disagreement

Top disagreements among couples include the level of debt to take on (49 percent), the style of house (46 percent), size of house (45 percent), and whether or not to buy a house in need of renovation (43 percent).

Some couples may also struggle with different housing preferences based on gender and location. The data shows that women prefer traditional, cozy homes (48 percent) in the suburbs (54 percent), while men are more open to modern homes (48 percent) in urban-like settings (40 percent). Additionally, survey respondents from the West opted for city living (31 percent) more than those from the Midwest (8 percent).

“Buying a home is stressful for just about anyone, but even more so for couples and first-time homebuyers,” said Matt Humphrey, co-founder and CEO of LendingHome. “To navigate the homebuying process smoothly starts by first being aware of some of the pitfalls. We hope that this data and the resources we provide help couples manage their differences and better communicate during the process.”

In searching for your dream home, it’s important to get clear on your wants versus needs, your firm deal breakers, and ability to analyze the pros and cons. The goal is to get on the same page at the beginning of the search in order to minimize conflict throughout the process.”

Key Housing Differences Among Men and Women

The data shows key housing preferences and differences between men and women:

• Women prefer traditional/cozy houses (48 percent) versus modern homes (34 percent). They also prefer the suburbs (54 percent) versus a big city (15 percent), and established neighborhoods (46 percent) versus an urban-like environment (21 percent).

• Men are more open to the the style and location of their home. They like modern houses slightly more (48 percent) than traditional/cozy homes (42 percent). They equally like living in an urban-like environment (40 percent) and an established neighborhood (39 percent).

• While most men also prefer the suburbs (42 percent) -- yet 12 percent less than women -- their second choice is equally split between living in a city (25 percent) and countryside (24 percent).

All’s Well That Ends Well

In the end, most couples leave their disagreements behind and many are more committed:

• 60 percent of couples said that their disagreements when buying a house didn’t matter in the end.

• Over 50 percent of couples felt more committed to the relationship after purchasing the house.

Source: Lendinghome