There can be no doubt about the fact that the decade we have just entered will be one of momentous demographic change. As the baby-boomers reach pensionable age and Generation X gets within sight of retirement, Generation Y – also referred to as the “Millennials” – will be stepping into their shoes; meanwhile, below them, the next cohort (“Generation Z”) is starting into working life – and is likely to dominate the employment market.
Whether it is the generational composition of the labour pool or general shifts in the employment market, none of these changes will pass without an effect on the property sector. The demographic shift will influence how people live, work, shop, and spend their free time; and all of these things will affect how the property market works – most visibly in major cities.
Four key issues in demographic shifts
In a new study, Cushman & Wakefield has closely examined how the demographic changes ahead will affect the property market, focussing on four key issues in the closing report:
- What happens as baby-boomers age?
- How will Millennials develop?
- What is the difference between Millennials and Generation Z?
- What influence will global metropolises exert?
By examining these four key issues, Cushman & Wakefield is able to identify new challenges and opportunities for investors and participants in the property market through to 2030.
Baby-boomers: High purchasing power and time-honoured habits
Relative to other groups and metrics, baby-boomers have high purchasing power – and make use of it shopping in bricks-and-mortar stores; online shopping plays a secondary role in their spending habits. By 2030, all of the baby-boomers will be 65 or older, leaving them with more time to pursue their interests and hobbies, which are primarily travel and holiday (especially cruises), golf, DIY, and shopping. Moreover, they will drive increasing demand for places in retirement and nursing homes as well as multi-generational living concepts; their advanced age means that they require more medical care than the generations below them.
Taken together, Millennials are a large group with a pronounced interest in the environment; many of them are also of the opinion that companies should contribute to improving society. For some in this generation, environmental considerations and corporate social responsibility are criteria on which they base their purchasing decisions. Notwithstanding, Millennials are no opposed to a little luxury. While some of them are moving out of cities and into the country in order to have more space at their disposal, they are unwilling to sacrifice the convenience of having facilities within walking distance. Why would they, either? They grew up with shopping centres nearby in the areas around major cities, and so expect there to be gyms, crèches, and restaurants wherever they are.
Generation Z: Digital natives
No generation is as digital as Generation Z. Worldwide, these age cohorts make up 26% of the population, and besides information technology, international terrorism has been a defining factor in their upbringing. That leads to a correspondingly pronounced desire for safety and security – one much more marked than among Millennials. Companies do well off of this generation and its willingness to adopt new technology; they way to win them over is to provide revolutionary shopping space, e-commerce solutions, and home delivery.
The urban environment
As the world gets more global and more digital, people are getting more mobile. The result of this is that cities now find themselves increasingly having to compete to attract the next generation – and doing so is the only way to make sure highly-qualified professionals come and stay. This means that networks and synergies will remain crucial, and regions which have flourishing, productive markets will continue to attract immense levels of investment; other cities, meanwhile, will see their importance decline as their population ages too rapidly. Investors will need to balance their portfolios in light of these changes.
What is important to remember when considering these future scenarios, however, is that the demographic shift won’t happen overnight; it is a process, not an event, meaning that cities will change slowly as they adapt to these new developments. The challenge for those in the property sector will be to implement change in good time and draw the right conclusions about which action to take.
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