Generation X and Millennials Expected to Inherit $4.6 Trillion in Real Estate
Preemptive Gifting on the Rise Before Formal Inheritance
There are projections that members of Generation X and Millennials around the world, who have wealthy parents, will inherit an astronomical amount of real estate over the next decade.
The Wall Street Journal (WSJ) reported on January 16 (local time), citing a report from real estate brokerage Coldwell Banker Global Luxury, that approximately 1.2 million high-net-worth individuals with a net worth of at least 5 million dollars (about 7.4 billion won) are expected to pass on more than 38 trillion dollars in assets to their children over the next 10 years.
Real estate accounts for a particularly large share of this inheritance. According to the report, Generation X and Millennials are estimated to inherit 2.4 trillion dollars worth of homes and land in the United States alone, and a total of 4.6 trillion dollars (about 6,787 trillion won) in real estate globally.
The WSJ analyzed, “The Baby Boomer generation and previous generations have accumulated unprecedented levels of wealth over several decades,” and added, “Now, as this wealth is transferred to the next generation, it is having a significant impact on the luxury real estate market.”
As this transfer of assets accelerates, wealthy individuals are increasingly involving their children in inheritance discussions at an earlier stage. The WSJ noted that, especially among the ultra-wealthy, there are more cases where parents proactively purchase luxury real estate for their children even before the formal inheritance process begins.
In fact, in Manhattan, New York, family funds are playing an increasingly prominent role in major real estate transactions. Ian Slater, an agent at real estate brokerage Compass, said, “In the past, it was common to gift an apartment worth 3 million to 5 million dollars (about 4.4 billion to 7.4 billion won) to children aged 25 to 30, but recently, there are parents buying properties in the range of 15 million to 30 million dollars (about 22.1 billion to 44.2 billion won) for their children.”
On the other hand, large mansions are becoming a burden for the younger generation, leading to a surge in such properties being put on the market. The WSJ explained that this is because multi-generational homes, which require significant staffing and maintenance costs, are often viewed as a burden by heirs.
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