2024-03-01 17:51:03
This article was originally published in English
Over the next 20 years, young people could inherit trillions of euros in property and real estate assets passed down from their ancestors.
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Millennials could become richest generation ever, says 2024 report “Wealth Report” from the real estate agent “Knight Frank”.
Broadly defined as people born between 1981 and 1996, millennials, also known as Generation Y, could enjoy a sizable windfall over the next 20 years, thanks to real estate and other assets amassed by their parents and grandparents. This windfall could amount to approximately 83.1 trillion euros in the United States alone.
“When the Silent Generation (born between 1925 and 1945), Baby Boomers (1946 to 1964), and the oldest cohort of Generation their houses will be liberated”says the report, according to “Yahoo Finance”.
Liam Bailey, Global Head of Research at “Knight Frank”believes that the influx of wealth among the younger generation should go a long way towards increasing sustainable investments and the conscious reduction of the carbon footprint.
“Millennials seem to have gotten the message when it comes to reducing consumption. 80% of men and 79% of women surveyed say they are trying to reduce their carbon footprint”says Liam Bailey, as reported by the British daily ” The Guardian”.
Can an inheritance be enough to cushion current economic shocks?
Although inheritance is likely to add a nice jackpot to millennials’ finances, the current reality is much darker. Millennials have already suffered a number of shocks such as Brexit, the pandemic, the cost of living crisis, the war between Russia and Ukraine and the resulting energy crisis. More recently, the war between Israel and Hamas and the Red Sea attacks have also contributed to increased economic and geopolitical uncertainty.
Several of the above factors have also led to rising inflation, with inflation in the UK reaching a 41-year high of 11.1% in October 2022. Although it has fallen since then, standing at 4% in January 2024, inflation remains twice the Bank of England’s 2% target.
In the UK, this has led to rising interest rates as the Bank of England attempts to bring inflation under control. Mortgage rates have also increased. Due to the price of real estate, many millennials say they can’t afford to buy a home right now.
The cost of living crisis has also contributed to many millennials saying they live month to month on their salary and cannot afford to contribute much to savings accounts or pension funds. . This contrasts with the stereotypical image of the average millennial wasting their money on expensive coffees and other luxury goods.
According to the Resolution Foundation’s 2023 Intergenerational Audit Report, “Millennials, born in the late 1980s, earned on average 8% less at age 30 than their counterparts of the Generation X cohort, when they were the same age.
Millennials are more optimistic about their income growth
The study “Next Generation Survey” of “Knight Frank” shows that 75% of ultra-high-net-worth millennial men (HNWIs) expect their wealth to increase over the next 12 months.
When it comes to women, 64% of HNWI millennial women expect the same. This figure rose to 81% when it came to the next generation, Gen Z, with half revealing they expected a “significant growth”.
This is likely because many investors believe that central bank policies aimed at containing inflation have worked well so far, with the process of disinflation accelerating in recent months. The prospect of interest rate cuts by several major central banks later this year also contributed to this positive sentiment.
Despite several economic shocks, several stocks, particularly American, also performed well. Companies specializing in artificial intelligence have been among the best performers and have attracted considerable interestwith companies such as “Nvidia” which have performed particularly well, as well as the “magnificent seven” US stocks as a whole.
“The improving outlook for interest rates, the good performance of the American economy and the strong rise in stock markets have favored wealth creation on a global scale. At the end of 2023, there were 4.2% more ultra-high net worth people than a year earlier, with nearly 70 ultra-high net worth investors created every day, bringing the global total to just over 626,619″, says Liam Bailey
According to the wealth report, this trend is expected to continue, with the number of wealthy people worldwide expected to increase by approximately 28.1% by 2028. Malaysia is expected to grow by 35%, Indonesia by 34%, India 50% and mainland China 47%. However, globally this is still lower than the 44% increase seen in the five years to 2023.
Millennials are also more optimistic that residential real estate prices will continue to rise, which could lead to a significant increase in the value of their properties and real estate investments once they inherit those from generations previous ones.
“The growing cohort of high net worth individuals views real estate favorably. Nearly a fifth (19%) of UHNWIs plan to invest in commercial real estate this year, while more than a fifth (22%) ) are considering purchasing residential properties. Growth over the forecast period provides ample opportunities for investors, especially developers who can offer real estate to suit the changing tastes of the nouveau riche”, says Liam Bailey.
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