One of the most important upcoming events that does not get highlighted often enough is that in 2020, the first wave of millennials will be turning 40.
Millennials, a generation associated with instability and instantaneousness, are fast approaching an age that is thought to be synonymous with settlement. And the first step on that journey of settlement is owning a home. This is why the real estate industry, globally, is keeping a watchful eye on this event more than any political or social event.
The Middle East and North Africa (MENA) region is no different. With 60 per cent of the MENA population below the age of 30, the generation of millennials is real estate’s most important demographic. Research has revealed that more millennials are now interested in buying their own homes, a trend that has triggered a mixed set of responses from analysts and developers.
While some are still sceptical about its results and questioning its integrity, others are already preparing to woo the generation to own homes. We have been diligently working to harness this potential and value the financial power that this generation holds. This made it essential for us to not only come up with properties and amenities they would like and prefer, but to tailor entire communities around them.
Going against stereotype
Being research-driven, we conducted extensive market surveys and established that this trend is not just flourishing, it is here to stay. We found that despite the evident fear of commitment, millennials are subscribing to the notion of purchasing their own property rather than renting one. They are beginning to realise that when they rent, they are only helping pay off someone else’s mortgage, when they could very well turn this dead investment into payments towards a lucrative asset — a home of their own.
For example, renting a home for around 20 years can cost over Dh2.16 million, whereas buying it would cost just over Dh1.76 million. Once the mortgage is paid off, you have a valuable asset in your hands. This shift in the millennial understanding of real estate ensures an increased demand that will stabilise and boost the market.
Focusing on the millennial demographic makes even more sense for a city like Dubai or a country like the UAE, which is home to people from over 200 nationalities and building up to the Expo 2020 Dubai. Such events will further increase visitors beyond Dubai’s ever-growing tourism industry and overall positive economic future.
Going by facts, with a population growth rate of 10.7 per cent, Dubai is among the fastest-growing cities in the world, welcoming professional talents and high net worth individuals who are assured a strong, stable, and high-growth economic environment.
The approval by the UAE Cabinet to grant 100 per cent ownership of non-free zone businesses by foreign investors, the decision to grant 10-year visas for investors and professionals, and the UAE’s Golden Card permanent residency programme will be significant catalysts in encouraging millennials to invest in Dubai.
Catering to this demographic is not merely about integrating more shared social spaces and playing into other youth-centric trends, but is about helping millennials overcome their fear of commitment by offering affordable and flexible payment plan options. This is complemented by numerous initiatives, such as Dubai Land Department’s recently launched “Manzili”, which provides real estate opportunities for young government and private sector employees, based on their monthly incomes and future aspirations.
It is high time for developers, financial institutions, regulators and policymakers to join hands and be aligned in facilitating the process and encouraging millennials to invest in property. As such, we are not only helping the real estate sector regain ground, but are also paving the way for markets to grow on the back of more empowered, financially confident, and socially stable millennials, who, after all, constitute the buying power that holds the key to a more prosperous and sustainable economy, regionally and globally.
Farhad Azizi is CEO of Azizi Developments.