By: Sean Gaskell- COO of RE Capital
In today’s world, the traditional notion of luxury is being challenged as it becomes clear that the lifestyle and priorities of the next generation of consumers are drastically different from those of their parents. These changes manifest themselves in many ways – from people’s choice of fashion brands, food and transportation, to where and how they decide to spend their holidays and the types of homes they live in.
As of 2020, 23% of the global adult population could be categorised as millennials (an age group comprised of those born between the early 1980s and the mid-1990s). This generation is larger than any other adult cohort, which is why understanding its motivations, aspirations and values is of paramount importance to businesses offering luxury products and services.
What do these generational shifts mean for the luxury property market and what can we do to ensure our offering resonates with the needs and desires of millennial property buyers?
Millennials are often referred to as the demographic driving the experience economy, which sees them spend more money on doing things (including travel) rather than buying things than the previous generation.
That makes living in well-connected international hubs, like Lisbon, particularly appealing. The combination of good transport links, proximity of the airport to the city centre and a multitude of international connections, all make the Portuguese capital a sought-after base for digital nomads who enjoy spontaneous city breaks and want to be well placed to reach other European capitals whenever they’re in need of a change of scene.
Hungry for experiences and more culturally aware than ever, today’s luxury property buyers want to live somewhere with a substantial international community. For a while, London’s status as Europe’s leading cultural and business hub remained unchallenged, but Brexit is forcing many to explore alternative locations.
With its sunny climate, wealth of heritage, exciting dining scene, convenient geographical positioning, and a variety of business incentives, Portugal is emerging as one of the most sought-after destinations for affluent digital nomads. A range of successful tech, finance and fashion businesses, including Google, Revolut, Farfetch, and BNP Paribas have opened offices in Lisbon over the past few years, further adding to its appeal from an employment perspective.
Proximity to green spaces
In 2021, affluent buyers are more than ever aware of the positive impact open green spaces can have on mental and physical health, and the Covid-19 pandemic has put the importance of the outdoors back on the buyers’ radar. For those set on living in the city centre, where houses are scarce, having a park within walking distance is often one of the key criteria determining the suitability of a property.
This new breed of buyer is accustomed to the speed and convenience afforded by the likes of Deliveroo and Getit, as well as 24/7 gyms, which allow them to save time. Savvy real estate developers understand that today, for a property to be deemed luxurious, it needs to be equipped with the facilities of a five-star hotel. Swimming pools, fitness centres, spa, co-working areas and restaurants, where residents can have lunch with business partners or family at short notice, have now become a necessity, enabling residents to get everything they need right on their doorstep.
The new generation of consumer veers towards understated luxury, apparent in the types of clothing, holidays and homes that many of its members choose. Quality, longevity and simplicity are key – anything deemed ostentatious risks sending the wrong message. What that means in the context of luxury property is minimalist interiors and uncluttered spaces, created using the best available materials that last. This stands in stark contrast to the opulence and excess that were once considered as the primary markers of status and success among wealthy property buyers.
Today, we’re seeing a shift in people’s consumption patterns. From switching to electric cars from Range Rovers to cutting down on red meat, those in their late 20’s and 30’s are acutely aware of over-consumption, and this changes the way they think about space, too. Instead of investing in a large house with multiple bedrooms, many of which may lie empty, and vast grounds with a swimming pool which requires constant upkeep, many would much rather buy a luxury apartment with the perfect amount of space for living, working and relaxing, and a balcony or a terrace, where they can enjoy the sun without the need to maintain a garden, with the benefit of hotel-style residents’ amenities within their building.
Heritage properties have always attracted high levels of interest from affluent buyers. However, as our society becomes more environmentally aware, there’s been a bigger focus on sustainability and optimised energy consumption, which is one reason why new build developments are now in high demand. Equipped with energy efficient lighting and heating as well as high-quality insulation, new build apartments and houses offer buyers another way of reducing their carbon footprint.
Luxury is a timeless concept which will unlikely cease to exist, but its definition will continue to evolve. For a luxury business to remain relevant, it is essential to stay attuned to the desires and needs of the customer, who, as we know, is always king.