Perspectives 2019

By 2030 the oldest millennials will be almost 50 years of age. They will also be the largest demographic in most developed countries, making a big impact on patterns of use in real estate sectors such as rental and tourism & hospitality. Rental In recent years, there has been a notable fall in the numbers of young people buying a home: 38% of 25- to 34-year-olds are homeowners today, down from 55% a decade ago. However, many millennials will be in their mid-forties by 2030 and will want to own if they do not already. Doing so may be made easier with schemes like Help To Buy, which has so far supported over 225,000 buyers and created real improvements in the first-time-buyer landscape. There is also evidence that the future of rental is bright, both in the private rented sector (PRS) and build to rent (BTR). In recent years, purpose-built stock and professional management have made it a more appealing option for people who need both flexibility and convenience. A large proportion of new developments now include amenities such as concierge services, rooftop space and gym facilities – which all add to the appeal – and renters are more likely to be able to live centrally, putting a wider range of leisure activities within reach. Over the past decade, the number of households in the UK private rented sector has grown by 63%, and the proportion of 45- to 54-year-olds renting has grown from 11% to 16%. While renting used to be the province of those in their 20s or early 30s, it is now a serious option for all age groups. Websites like spareroom.co.uk have also grown since the credit crisis, helping to widen rental options and choice, and those in search of a place to call home can view profiles for both flatshares and flatmates. As a result, there is now an unparalleled level of choice in the market that caters to a wide range of rental needs. Tourism and hospitality While the UK is already a global leader in tourism – the fifth- largest destination in the world by Middle-aged Millennials? expenditure – it could be set to grow even further in the coming years as global millennials have an impact. Presently, the 25-34 age group is the largest demand generator of overseas visitor nights spent in the UK (18.1% of the total) and second largest in terms of spending (19.4%). This will likely be boosted by a new wave of millennial tourists set to come to the UK from China, India and the US in the next few years. The UK’s share of outbound visits from China has grown by around 20% over the last decade, with the number of visits by Chinese citizens growing 16% between 2017 and 2018 alone. With more than a third of the world’s millennials living in India and China, we can expect visits to continue growing – especially as both nations are currently in the top three for the number of passports being issued. How will the hotel and tourism industry best capture this demand? Growth in younger tourists opens the UK up to independent travellers who will want flexibility, distinctive cultural experiences, and accommodation with design-led facilities and connections – all at an affordable rate. This provides a number of opportunities for investors in the sector to develop their USP and target sales efforts more effectively. For instance, in recent years we have seen the advent of affordable lifestyle hotels, hybrid hostels and new generations of serviced apartments, all designed to cater to the needs of young travellers. Such developments have also been a significant element of the hotel industry’s response to the growth in home-sharing platforms such as Airbnb. These innovations create further options for investment as well as flexibility, with more and more new hotels opening in up-and-coming areas beyond London's traditional tourist hotspots. The key to capturing demand will be product development strategies that focus on creating opportunities for social interaction – including hybrid concepts offering not only a place to sleep but also a vibrant environment in which to work, relax and play. Additionally, changing patterns of use will provide an opportunity for hotels and hospitality both in London and the regions, as travellers seek new and different experiences outside the Capital. A large proportion of new developments now include an array of amenities such as concierge services, rooftop space and gym facilities, which all add to the appeal PERSPECTIVES 06 COVER STORY