Millennial investors increasingly investing in Indian commercial real estate : Survey (2024)

FAQs

Why real estate is a good investment in India? ›

The market offers potential returns, tax advantages, and a hedge against inflation. Real estate has been an important source of income for thousands of years. Buying property to capitalize on growth and generate income is the primary objective of real estate investment.

Gen Z and millennial investors are embracing crypto, real estate, and private equity along with stocks. Data from Bank of America Private Bank reveals how formative memories of the 2008 financial crisis and COVID pandemic may be impacting young investors.

What funds does Gen Z care about? According to NASDAQ, 73% of Gen Z own stocks, “making them the most common type of investment for this generation.” The same survey found that 15% of the generation's investors are using ETFs, 30% hold bond investments and 22% buy index funds.

Apart from sneakers and drip, the primary investment tools, preferred by Gen Z's preferred tools are equity markets and mutual funds. They seek alpha returns while diversifying their portfolios with safer options like bank fixed deposits and gold bonds.

It offers high returns, lesser risks, and long-term value. Commercial real estate investing offers benefits like tax benefits, security, high appreciation rates, and continuous cash flow.

The sector's strong PE ratio of 54.8, along with impressive returns on equity (41.8%) and capital employed (39.1%), underscores its robust performance and profitability, making it an attractive choice for investors seeking stability and growth.

Millennials embody a set of evolving values and aspirations that greatly influence their choices and behaviors. This generation highly values authority, achievement, and influence, demonstrating a strong desire for control, success, and recognition.

The average millennial is now entering their "sandwich generation" era and willing to spend lavishly to have more time to themselves. Colleagues and friends said they're spending money on house cleaners, babysitters, elder-care workers, dog walkers, and smart-home features.

Millennials or Gen Y were born 1981-1996, making them currently 28-43 years old. Having grown up immersed in technology, they rely heavily on mobile devices and social media over traditional media. 89% use social platforms regularly to interact with brands, friends, etc.

Gen Z spending habits show they care the most about fashion, makeup and beauty products, technology, and their pets. This is perhaps due to their young age and few major bills.

What generation owns the most wealth? ›

In the fourth quarter of 2023, 51.8 percent of the total wealth in the United States was owned by members of the baby boomer generation.

Gen Zers face greater obstacles to financial success

Not only are their wages lower than their parents' earnings when they were in their 20s and 30s, but they are also carrying larger student loan balances.

Where Are Young, Wealthy Investors Putting Their Money Now? The Bank of America survey found that 80% of young investors are now looking to alternative investments, such as private equity, commodities, real estate and other tangible assets.

Gen Z and millennial investors emphasize value, growth, and large cap stocks. The most common types of stocks owned by Gen Z and millennials -- as well as older generations -- are growth stocks, value stocks, and large-cap stocks.

They are pragmatic and value direct communication, authenticity and relevance. They also value self-care. They may be more likely than older people were when they were the age of the Gen Zers to question rules and authority because they are so used to finding what they need on their own.

The average rental yield in India is around 2-3%. This means that for every ₹100,000 you invest in a property, you can expect to earn around ₹2,000-3,000 in rent each year. So, for a property worth 1 crore, you can expect to earn a rent of around 3 lakhs a year. However, you will not get to keep all of this money.

India's real estate market has witnessed robust growth in recent years, a trend expected to continue according to the real estate forecast next 5 years. This growth is driven by a confluence of factors, including favorable government policies, a surge in urbanization, and rising disposable incomes.

Indians often have an emotional connection with real estate and gold investments because of the belief that the value of these assets will always grow with time or remain intact. This emotional bias often comes in the way of investors making rational decisions.

The best return on investment on rental property hovers between 3% and 4.6% in India. To understand what it means, the concept of return on investment needs to be understood. ROI or return on investment refers to the profitability of a rental property in percentage terms.