“The habits of Italians are changing, and we real estate market players must be able to read these changes and adapt to the new challenges we face.” This was said by Mirko Baldini, CEO of Cbre Italy, as he presented the real estate company’s survey titled “Live-work-shop Italy,” in which more than 20 thousand people around the world were interviewed and the results extrapolated from 1,100 Italian respondents.
The behaviors of the various generations and the effects on the real estate market
Five generations were compared: 16 percent belonging to Gen Z (ages 18-25), 17 percent to Late Millennials (ages 26-33), 18 percent to Early Millennials (ages 34-41), 31 percent to Gen X (ages 42-57), and, finally, the remaining 19 percent to Baby Boomers (ages 58 and older). These are the percentages worldwide but do not deviate by more than one to four percentage points maximum when looking at the Italian situation. The survey highlights how “globalization is smoothing out the various geographic differences, with Italians aligning with other countries on the main trends (from e-commerce to hybrid work),” explained Giulia Ghiani, head of research & data intelligence at Cbre Italy, who then added, however, that cultural differences persist. “In particular, generational differences within Italy seem to be greater than between countries,” Ghiani added.
How are the various real estate sectors moving, and what are the emerging trends?
The residential sector: focus on “live”
One of the themes that have emerged is an intense desire for mobility, especially (but not only) in the younger generations. “Thirty-seven percent of Italian respondents express a desire to want to change homes within the next two years, and the majority of these people (63%) are under 33 years old,” said Silvia Gandellini, head of capital markets & A&T High Street at Cbre Italy, commenting on research data that show a strong preponderance of homeowners but also a strong interest in the rental formula.
Let’s look at the numbers: of those surveyed, 61 percent own their own home, with different percentages depending on the various generations. They range from 41% of Gen Z to 81% of Baby Boomers. People under 33 are the most likely to move into rental housing (73% of respondents under 33).
Housing affordability changes considerably between generations, penalizing younger segments of the population, particularly in central areas of large cities. Young people continue to place a strong emphasis on price as a consequence of lower spending capacity. In line with European results is the preference of Italians to move to more decentralized areas, while it is interesting to note that the two extremes of the population, Baby Boomers and Gen Z, are the most likely to move abroad.
What are the challenges of the Italian residential market?
“In the coming years, the residential sector will have to be able to offer more affordable alternatives, particularly rental housing through the development of new multi-family and built-to-rent products in large cities,” Gandellini explained, adding that these are the demands of younger generations and individuals with limited economic resources. “The challenge for the sector will be to offer housing solutions with a positive impact both environmentally and socially, such as affordable housing, senior living, and student housing,” he added, pointing out that multi-family investment can generate a return of around 4 percent net.
The office sector: focus on “work”
“Offices are back as the asset class of reference, but in a key role,” explained Fabio Mantegazza, head of advisory & transaction services at Cbre Italy, pointing out that “hybrid work is now a key trend in the office world” and that, “in the coming years, we expect that corporate companies will favor offices located in highly accessible locations, rich in services and comforts in the area, able to offer excellent quality of work and attention to well-being.”
Thus, good quality of services and facilities are crucial to increasing employee satisfaction and making the workplace more attractive. The research shows that less than half of Italian respondents (48 percent) are overall satisfied with the quality of their current office work environment, a lower level than their European and global colleagues, where overall satisfaction reaches 62 percent and 66 percent, respectively.
“Occupiers will have to consider all these aspects to meet the demands of their employees best, and we are confident that the workplace will be able to help attract and retain talent, especially for the younger generation,” continued Mantegazza, who explained that the profitability of the office sector is about 3.9 percent net.
The retail sector: focus on the “shop”
Online or physical store? Most Italian consumers still prefer to buy in-store (61 percent). Underlying this preference are three factors common to all generations:
- the possibility of seeing and trying products
- their immediate availability
- the support of the salesperson
Certainly, however, one must recognize the online formula, which gathers the interests of all generations. Digital natives are not, in fact, necessarily the primary consumers of e-commerce, as Cbre Italy research shows where Gen Z is as likely as Gen X to buy primarily or exclusively online.
What to do in the future? “It is important for retailers to commit to improving the experience for the omnichannel consumer and to invest in their employees’ training and retention, to ensure that the end customer receives all the benefits of a great service to support their purchasing decisions,” Baldini concluded.
