January 18, 2006

A 50s revival: shake rattle 'n' Rolls-Royce

Posted in Irish Independent ·
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Ireland is getting old. Over the next twenty years the population aged over sixty five will more than double to nearly nine hundred thousand. Today one in ten of the population is over 65; in two decades it will be close to one in five. By
2031, two hundred thousand of us will be over 85.

Most have not woken up to this idea yet because we are still stuck in the “we are the youngest population in Europe” mindset of the 1990s. The aging of the population has profound implications about where and how we live. Ramifications for the health, education and tax systems are enormous and its impact on the property market will be greater still.

Perhaps one of the most conspicuous changes as we get older will be in how and what we spend our money on. Amazingly, advertising is still obsessed with the image of young, healthy consumers who are typically in their twenties. However, the real money in every western country is held by people in their forties and fifties, and they are largely ignored in glossy magazines and on our screens.
This oversight will not last much longer. Not only will these consumers have more money that any generation of Irish adults ever but very soon they will start to spend it. There will also be more of them than ever before and their
wealth — based on property – will be significant. If the property market does not crash (admittedly, a big if) it is estimated that by 2025, the value of housing inheritance alone to Irish society will be 8 billion euro per annum.

In addition to wealth, they will be well-travelled and educated. Over the coming two decades, the bulk of the Irish population — the baby-boomers of the late 1960s and 1970s – will move into what was traditionally termed middle-age. For example, by the late 2020s, even if the young immigrant population swells, those in their fifties and sixties will constitute the largest cohort of the Irish population. But they won’t class themselves as middle aged; they
will be something else.

Nascent signs of this new tribe are already emerging. You can see them around you. If you want to get a glimpse of the future, think of Bob Geldof. Now do you recognise them? This is the Geldof Generation. Like fifty-something Bob,
they are not middle aged, they are middle youth.

They wear combats, parkas and trainers. They receive I-pods for Christmas. Their CD collection (or downloads) is remarkably similar to that of their children. Geldof Generation mummies often weigh less than their daughters. They refuse to grow old and frankly, why should they? They are healthy, fit and plugged in. Whereas their parents at fifty something were slowing down, putting their feet up and thinking about retirement, the Geldof Generation are taking on new projects, getting divorced, changing jobs, logging on and exploring the world of hemp. They are environmentally aware, socially concerned and self-absorbed.

They are also rich. They are Ireland’s accidental millionaires — made wealthy by the property boom which they never suspected would happen. Not in their wildest dreams did they think that the four-bed semi which they scraped
for in the late 1970s would now be worth over 1 million euro. Some are already beginning to trade down, releasing equity. In property terms, the Geldof Generation are down-traders – the new darlings of the property market. The savviest property developers have them in their sights.

The Geldof Generation are the 1960s and 1970s radicals who railed against the bishops, flirted with Provo-chic, secretly suspected Eddie Gallagher was good in bed and, at the same time, supported to the hilt that most anti-republican statesman, Garret Fitzgerald. Today, they have – more or less unwittingly – become enormously asset-rich on the back of the property boom.

Despite reading Noam Chomsky, they climbed their way up the corporate ladder, paid expensive school-fees and kept the entire grind industry alive through the dark days of the 1980s and early 1990s. Now they are trading down. They
are moving from their five-bedroomed family homes to large suburban apartments with teak balconies, neat steel and glass kitchens and grey-slate wet rooms.
Not for them the tiny two-bed apartments of the re-gentrified inner city. They want big spaces, preferably with a nautical feel – smoked glass, porthole windows at the very minimum.

At the moment, due to demographics, the Geldof Generation is reasonably thin on the ground. This will change profoundly as the population ages. In twenty years time there will be close to a million Irish people in their fifties —
twice what there is in 2006. While today their impact is being felt at the margins of the property market, in the years ahead their spending will be concentrated in other markets. Unlike some of the free-spending of today, tomorrow’s
spending will be understated. It might even be termed “virtuous spending”.

Because some are vaguely embarrassed about how rich they have become and are desperately trying not to seem gauche or nouveau, the Geldof Generation will buy stuff that is good for them in an informed and discerning way. Equally, the pseudo-psychological self-improvement craze of Clinton’s America — one of their heroes — has not gone unnoticed, and as a result, they will splash-out on things that are worthwhile, long-lasting and life-enhancing.

This sweet spot where demography, sprightly longevity, affluence and pop-psychology intersect will be a honey-pot for the “Wellness Industry”. The Wellness Industry — the boom industry of the early 21st century – is about being
well, avoiding sickness, stress and mental pressure. It is the antithesis of the great 20th century industry – the pharmaceutical industry – which contends that when your body or mind eventually buckles from being driven too hard, it will find a magic pill — a silver bullet cure- that can rectify everything.

The Wellness Industry contends that it is about breaking this cycle of dependency, it is about taking control of your own life, your nutrition, your body, your mind and ultimately your soul. It purports that we don’t have a health
service at all, because in reality it is more of a death service — a place you go when you (or parts of you) are dying. The key is to avoid this at all costs and the best way to do this is to focus on your inner health, on the health
of your mind, body and spirit. Whether you believe all this or not, the Wellness Industry – from adult education, yoga, organic food, vitamin supplements, health spas and Pilates — is booming. The business in Ireland is forecast to
be worth about 1 billion euro this year. By 2010 Amarach Consultancy (the well-known market research firm) suggests that the business could be worth over 5 billion euro.

It is not so difficult to envisage. You may have noticed that many hotels have recently been investing heavily in spa facilities. A great place to check this growth out is in the ads of your local supermarket or local shop. In the past,
they used to advertise second-hand bikes or lost dogs, whereas now most advertisements are for some class of self improvement — whether it is night courses, Astanga pregnancy classes or eastern philosophy for beginners.

You might also have noticed the explosion in organic or whole food shops. The whole food shop has mutated into a type of lifestyle apothecary for the Geldof Generation with its rosemary and thyme sour dough organic breads, its socially aware Fairtrade coffee and its flu-buster smoothies. Fashionably socially-aware mummies make a beeline for his organic carrots, his probiotic yoghurt and his Omega 3 oils.
The entire feeling you get in these places is one of well-intentioned virtue where everything is on a small scale, calm, slow and tailored to you- the sovereign consumer. You are more than a shopper – you are an advocate of the Wellness Revolution.

Granted, like any burgeoning unregulated industry you are going to get your fair share of quacks, cranks and charlatans but it is the fastest growing business in the land and fortunes will be made servicing this demand for wellness. It is the low-fat, high-energy manifesto for the Geldof Generation where every massage releases your own naturally produced endorphins, where every yoga stretch liberates you lithely from the stresses of modern living. In the Wellness Industry — the boom sector of the future – nothing you ingest is false, artificial, coloured or mass produced. No E numbers for you. You are part of a mass-movement.
Lie back, relax and sing, along with Sir Bob, the anthem of the wholesome, middle-aged wellness revolutionary: “Tell me why I don’t like Sundaes”.


  1. Pete

    You’ve written before about the idea of middle-aged empty-
    nesters selling the house, moving to a luxury apartment,
    and spending the cash released by doing so. Sorry, I just
    don’t see it. Sure, some people are selling huge mansions
    and moving into smaller mansions, but there’s a big mental
    barrier in Ireland about being “detached”. Once people
    have escaped the terraced or semi-detached house, and
    gone “detached”, they won’t go back, it’s like stepping
    down several social classes.

    As for them all turning into hippies in middle-age, that’s
    exactly what’s happened in all the other European
    countries that are ageing faster than Ireland, so it’s a
    good bet that the same will happen in Ireland.

    You correctly qualify your predictions with “if the
    property market doesn’t crash”. A few years ago you were
    certain in would, but you don’t seem to have written about
    it for a while. Any plans to publish your curent thoughts
    on the matter?

  2. David Mc Wiliams

    Hi Pete, thanks for the thoughts. I’ll write abot property
    again in a few weeks. But I’m still certain its wildly
    overvaled with only one logical outcome. David

  3. Billy Waters

    Property here is going to hit the buffers pretty hard. We
    can’t go on buying cardboard houses further and further
    from civilization. Not at the inflated prices we have
    now. I have a builder mate who only goes out on a night
    on the town with a roll of €50 notes. Nobody except other
    builders can keep up with him. He recently switched to
    €1000 notes because the €50′s were hurting his leg. We
    can’t keep funding that kind of profiteering forever.

    I rent a terraced gaff in Ballsbridge and have zero
    intention of buying it. After a correction I would
    consider buying. If I still have a job!

    Irish prices will fall when someone says “hey, that dude
    has no clothes!”

  4. Cathal Dunne

    I beg your pardon, Mr Walters. The Irish property market,
    while looking extraordinarily frothy at the moment, is
    being driven by very solid macro-economic forces that are
    supply and demand. Irish people are exhibiting justifyably
    high demand for bricks and mortar at rates that outstrip
    suplly, hence, prices go up.

    This is for the following reasons that cannot just be
    swatted away like some troublesome fly, who happens to be
    in the ointment of the theory that Ireland’s property
    market is in bubble territory:

    1) Ireland’s population has been the fastest-growing in
    the whole of Europe for the past 10 years at a 1.6% rate.
    These new people need new houses, our wealth means they
    will stay and buy houses(or flats) here, thereby
    sustaining demand and sustaining the property boom.

    2) Ireland’s population growth rate is strengthening, not
    weakening, as time goes by. Ireland’s population grew by
    1.5% in 2004, 2.1% in 2005 and 2.5% in 2006.
    More people at a faster rate means more residential
    accomodation purchased. This means that houses are sold
    easily and the property market continues growing.

    3) Ireland’s cohort of 20somethings and 30somethings are
    the fastest growing sector of population in our country,
    at rates of 5-6% per annum.
    These are the ones most likely to be buying housing,
    thereby sustaining demand and sustaining the sector as a
    whole.

    4) Ireland’s housing to people ratio at around 380 is
    below the EU average of 420.
    This means we have less houses per-person than or European
    brothers and sisters meaning our biulding contractors
    still have scope to build more, continuing the boom.

    5) Our New Irish, the Poles, Latvians, Slovaks et al. are
    making up 19.5% of all first-time buying in our country.
    This confirmed what I thought would happen post-May 2004.
    Our new countrymen and women are not only working here,
    they are also settling here. Their buying of housing, out
    of all proportion to their share of our population
    suggests to me a strata of society that is determined to
    make a life here. They, and the people who follow them,
    will be customers of Messrs Sisk, McNamara, McInerney and
    Mulryan for many years to come.

    6) Interest rate hkes are unlikely to go much beyond 4% in
    the medium to long term. i base this on the projected
    anaemic growth rates for our continental brethren. France,
    Germany and especially italy will not be able to stomach
    rates beyond 4-4.5% before their economies slip into
    recession.
    This liberates Irish citizens to borrow much more freely
    than would otherwise happen if we set our own monetary
    policy. Interest rates of even 4.5% are still to low to
    coll our property boom.

    7) Ireland’s infrastructure is still far below par.
    Care for a spot of road rage on the national car park, the
    M50, anyone? This is an excellent example of yet another
    place where the aforementioned Messrs can get their
    drawing boards and slide-rules into.
    Ireland’s road, rail, underground, electricity,
    educational and hospital infrastructure are still painful
    reminders of our poverty-stricken past. In the midst of
    our building boom, the Government have not been playing.
    Capital expenditure in the budget is hundreds of millions
    of euro behind target.
    Imagine what would happen if all the old schools,
    hospitals, closed railways and clogged roads were all
    renewed by a good 10 to 15 year plan of infrastructural
    development. This is an inevitable reality, the Government
    will have to invest in our public buildings sometime and
    that will keep our brickies in their 50s style they’re
    accustomed to. Plus the economy would benefit in general
    with better educated children, banishment of nasty MRSA
    bugs, quicker road delivery times and regional development
    opportunities opened up with re-opened railways.

    So, as I finish my rather bullish opinion on our poperty
    boom I say it is very much wearing clothes, Gucci, Armani
    and Versace designed clothes at that!!!

    (This post was not sponsored by the building, banking or
    brokerage businesses, all alliterations always intentional)

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