If you live in a small town oozing with character and with good communication links to a major city, young first-time homebuyers may be coming to you soon.
The next global trend for the younger digital creative classes is going to moving to high-quality small cities with vibrant artist communities, according to Savills World Research, the London-based real estate company.
McGuire Real Estate, which has an exclusive relationship with Savills, yesterday hosted Yolande Barnes, Savills’ director of world research, at an event. Barnes offered her findings on the status of top real estate markets around the world and their key drivers. She also presented a special report on the San Francisco Bay Area and its growing standing as an international world city.
The rise of ‘global hipsters’
Barnes said the phenomenon brokers and developers should be paying attention to is the rise of the “global hipsters” — a lot of them young, tech-led workers from all over the world and key movers in the digital age.
“The last three decades have been about concentration of capital, about money,” she said. Places like Hong Kong and Singapore have benefited from this. But the digital age, whose main concern is “cross-border human capital,” is changing the global real estate scene.
“While some say these globe-trotting hipsters can live anywhere, they actually have very strong views on where they want to live,” said Barnes.
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They are attracted to urban centers where they can reliably find a “flat white” coffee (the most popular coffee drink in London), said Barnes.
Looking for a city with reliable ‘flat whites’
“They want to live in a place where they can buy a flat white on the street and where they meet everybody else, possibly even their life partner,” said Barnes. “For the digital millennial, never has interaction been so important.”
Savills is predicting a return of the established middle or upper class from the suburbs to the city centers, but younger workers will not be able to afford to live in these areas, with stable economic growth putting pressure on land prices.
These hipsters will instead lead the new urban dispersal movement.
“People still want to be in the city, but it may be a smaller urban city, which has been ‘enabled’ by the digital age,” said Barnes.
That means more young people flocking to satellite towns like Brooklyn’s Williamsburg or the Bay Area’s Oakland. In these locations, there will be more townhouses and conversions, said Barnes.
Trending overseas
This is happening in the U.K., as young homebuyers try to find somewhere to buy within a commute to London, she said.
Margate, a pleasant seaside town in Kent, 70 miles from London, is currently experiencing a flood of popularity with hipsters.
“It has a really great art gallery and high-speed rail, and young people wanting to buy are starting to create this artists’ community there,” said Barnes.
“It’s about identifying a place that sparks the imagination of the younger generation,” she said.
There will be a “colonization of new urban areas by creative millennials outside city limits,” said Savills.
San Francisco is the global city with most potential
Discussing a tranche of statistics on top global cities and their current positions, London and New York often vying for top place, Barnes said international global management consultancy A.T. Kearney had named San Francisco the No. 1 global city in terms of future potential. This was due to its strength in innovation, economic prospects and its appeal as a place to live.
If she were coming back in 10 years, Barnes said she would be surprised if San Francisco weren’t in the upper half of the top 10 global cities. It is winning over Silicon Valley, according to Savills research.
“It would seem that in the digital age, cities are better attractors of footloose human talent than suburban campuses and business parks. This means San Francisco has an edge over the valley, and job creation has outpaced Silicon Valley since 2008,” said the company.
Barnes is predicting the San Francisco residential market still has more to go in capital values. “The fundamentals of the market still look pretty healthy, subject to jobs continuing and economic growth.”
With prime property prices at $1,150 per square foot, the San Francisco market is still 32 percent less expensive than New York and 56 percent cheaper than London, said Savills.
San Francisco and Silicon Valley likely to attract more big deals
More big deal purchases were likely in both San Francisco and Silicon Valley, predicted Barnes, with San Francisco home to 51 of the 400 wealthiest people in the U.S. — 70 billionaires in total.
This gives the city a density of one billionaire every 6.3 square miles, second only to New York. Billionaire enclaves are in San Francisco, Palo Alto, Woodside and Atherton, said Savills.
And the homes of the wealthy and the young may look nothing like the previous generations, said Barnes.
“What millennials are looking for is different from the baby boomers — what’s important to millennials is being in the right place with the right people and being in the right neighborhood,” she said.
As San Franciscans are moving to Oakland, well-heeled young New Yorkers are making their own, albeit incremental, changes.
“In New York, the Upper East side is old hat. It’s Midtown the millennials want — they want something completely different,” said Barnes.
