Living in uncertain times has taught us to think ahead only for the next couple of days. Markets, however, beg to differ, since future demand often represents the building blocks of tomorrow’s supply chains and business activity. In this vein, how is the property market eying the future? Specifically, are we thinking of how our next generations, specifically the Generation Z (Gen Z), will be shaping up the market? What if the next big disruptor isn’t a what but a who?
Getting to know the Gen Z
So, who are exactly the Gen Z’s? We may often confuse them with Millennials (the Gen Y). But Gen Z is the newest generation that comes after Millennials and precedes Generation Alpha. They were born between 1997 and 2012/2015, and are currently between 6 and 24 years old. Globally, Gen Z make up c. 34% of the population, while in Malta, Gen Z’s stand at c. 17%.
The next generation is a generation of entrepreneurs – indeed, according to an EY and JA Worldwide survey in 2021, 61% from Malta’s Gen Z would rather be entrepreneurs than employees. They are also confident in technology and automation – they were born in an online reality, with boundless access, and hence are used to being highly informed. Being financially and tech savvy perhaps makes them more risk-averse, with the majority of them considering themselves savers rather than spenders.
Z also stands for zero time to lose, so they expect prompt delivery, and in the face of cheaper deals of better service, loyalty is hard-earned. Gen Z’s can be considered the face of constant change. They have naturally learnt to be persistent, realist, innovative, and self-reliant. At the same time, they do also value community, and embrace that “we” replaces “me”, whilst also being connected to LGBTIQ and gender tolerance much more than ever.
Focusing on the local scenario, according to the 2020 EY Generate Survey, the local Gen Z want a more inclusive, sustainable and better Malta. High on their agenda are key issues of environment and overdevelopment. 84% of Gen Z’s do in fact believe that Malta’s environment is getting worse.
A value-adding experience to house hunts
Taking into consideration the above stylised facts and survey results, what should real estate operators (agents, designers, developers, etc.) be looking out for when dealing with Gen Z customers?
- With a next generation of workers that is more entrepreneurial, the real estate market should be expecting more start-ups in the field that operate with new business models, driving the industry to be more diverse and richer modus operandi. Competition for the next customer buying or renting from the property catalogue can become cut throat.
- The way business is carried out will also be changing, with tech being the main driving force. Being fully digital and always connected, electronic processes and smart infrastructure in a home or a rental community becomes paramount to Gen Z’s. So, for the real estate agents out there, is your website loading quickly? Gen Z’s will quickly switch tabs. How are you approaching potential customers? Gen Z is not a fan of phone calls - communication should be through social media or text. So, leverage those social media channels. Are your processes and applications fully electronic? You can easily be looking at having all rental agreements, payments and maintenance requests in electronic format. Are your viewing appointments strictly happening in-person? Virtual tours and walk through property viewings are becoming the new norm.
- Developers should also be looking at tech features. Gen Z expects a “smart” home where appliances, thermostat, security, and other features are all connected wirelessly. Finishes by developers need to match these standards. We have seen some elements of “smart” introduced locally, at higher pricing points. Introducing it further in the market will make it more accessible to Gen Z’s.
- Space is also a priority for Gen Z’s when it comes to choosing where and how to live. This space can come in the form of communal space or amenities, where people can hang out rather than be alone in their apartment. However, rather than communal swimming pools and fitness facilities, future developers should be looking at co-working spaces, creative/maker spaces, pet-friendly communities, having or being near shared entertainment amenities, discounts and partnerships with local businesses.
- When it comes to their personal space, Gen Z’s expect the ability to customize everything. Having grown up watching DIY videos, Gen Z want to customize their space. They also see permanent changes to the shape of the home itself where homes will be remodelled to accommodate working from home, home schooling, etc. This means that looking ahead, developers need to worry less about finishes and focus on tailor-made packages or solutions that allow flexibility for property owners or tenants. Main point is: “keep the physical space customisable”.
- Besides tech, smart and space, Gen Z’s increasingly care about green. So, developers should be thinking more about environmental considerations when carrying out their projects– from the way the building is designed, to sourcing sustainable materials, to managing waste in a circular fashion. Restoration and rehabilitations are also something that the property market could see more demand for – the new generation cares about our built heritage, is keen on saving and lending themselves to new skills.
Mapping it out to the market
So, what now? Do the players in the market need to rewrite their business models? What should Gen Z’s be expecting? Given that candidate buyers/tenants equally plan to use real estate professionals and rely on using online resources for their house hunt, the key takeaway is to decipher how to be value-adding. Monitoring the anthropogenic characteristics of our new generation and mapping them out to the property market seems like a good way to go about it. Right now, tech, smart, green, and customizability are the current new buzzwords which can take the market by storm.
In Paul Tudor Jones words’ “you adapt, evolve, compete, or die”. There is no other option. Unless you want to remain invisible to Gen Z.
Orlanda Grech is an Economist and Manager at EY Malta as part of the Valuation, Modelling and Economics sub-service line, with a special focus on Economic Advisory. Her main service offerings relate to macro-economic assessments, as well as cost-beneﬁt analyses, economic impact assessments, national strategy formulation, and market studies across a range of sectors, including the environment, health, education, culture, and R&I. She also holds a BHons in Economics from the University of Malta, and an MSc in Economics from the University of Edinburgh.
Orlanda can be contacted at Orlanda.email@example.com
DISCLAIMER: The content of this article does not necessarily reflect or represent the views and opinions of The Malta Chamber of Commerce, Enterprise and Industry.