The Millennial Real Estate ChallengeWed, 11/01/2017 - 11:45
The year 2017 was a volatile one due to global instability that created uncertainty in Mexico. But despite the challenges, many continue to believe the Mexican market is full of opportunities that are complex in nature.
“Lack of investor confidence is one of the country’s shortcomings but despite this context, the market is attracting investment thanks to the demand for new living opportunities by the expanding millennial market in Mexico,” says Fernando Gutiérrez, Director General of preconstruction and construction-stage supervision and control company Gaya.
According to INEGI’s latest Intercensal Survey, of the 119.5 million people living in Mexico, 7 percent are between the ages of 15 and 29 and 27 percent are younger than 15. “We expect almost 40 million millennials to enter the market in the coming years with needs that differ from those of previous generations,” says Gutiérrez. With 30 years’ experience in the industry, Gaya is familiar with the changing demographics and trends within infrastructure development. He believes the most important thing to understand is that millennials seek more than just traditional financial models when deciding on accommodation. Younger generations prefer to rent and seek sharing-economy models similar to Uber and AirBnB over purchasing a home.
Gaya foresees growth in the residential, office and commercial markets along with the mixed-use sector and wants to understand what mixed use means to millennials rather than imposing the requirements of previous generations. “The way people use infrastructure is constantly changing and we must adapt aggressively to ensure Mexico City is a futuristic and forward-looking city,” he says.
Gaya has experience with Miyana and Antara, two significant mixed-use projects in Mexico City. But Gutiérrez believes that the real challenge lies in adapting legislation to the changing use of land and making sure investors understand the different financial cycles involved in mixed-use projects. “Each segment – residential, commercial and office space – has a different financial rhythm and in mixed-use developments all components need to work together,” he says. “Investors need to understand the dynamic and multicyclical 211 financial model involved in mixed-use developments.”
In the last 40 years, the industry has been moving away from vertically structured offices to more horizontal and matrix-driven spaces and that change is exciting to developers and architects. “In the future, offices will become more open, multifunctional and focused on casual collaboration,” Gutiérrez says, adding that an office space exhibits the theory and philosophy of a company. What was once an optional added value has now become a requisite for success. This can also be seen in the increasing importance of sustainability, which has become a basic element for any infrastructure project.
But Gutiérrez says millennials are pushing the boundaries even further by demanding not only green buildings, but buildings that promote healthy lifestyles for workers. “LEED continues to be important but it is not as relevant as it was, while wellness is increasing in importance,” he says. “The body produces hormones depending on the lifestyle, light and temperature it receives. Being inside a building directly impacts our wellbeing depending on the qualities of the environment.”
The idea of a Wellness certification will push developers to take these factors into consideration and contribute to improving the health of the people who live and work in these structures. The certification focuses on small details such as the wattage and color of a lightbulb – features that can have a massive influence on the body and the hormones it releases. But Gutiérrez says the process is not as cumbersome as it seems. “Wellness does not imply more expensive buildings but simply a smarter use of resources,” he says. “Developers do not have to carry out lengthy research on the matter as the Wellness certification authorities have already collected the information, making it even easier to implement.”