We’re all seeing masks and preventive measures being taken because of the novel Corona Virus (Covid-19). It is no surprise that such a serious outbreak has caused the world to issue a global quarantine. But what are going to be the effects of this on the global state? Surely, since no one is allowed to leave their house, there will be no work. According to an estimate, almost 25 million people will be out of jobs by the end of the year. Yet we have to pay our taxes and rents as well. In fact, all our businesses and homes are at risk because of this global pandemic and we need help.
There is a dire need to understand the economic and financial circumstances because it affects us all. One important aspect of it all is the Real Estate market. It is key to note the effects of the virus on it because it is one of the most significant ones. Also, it is one of the most affected ones. Let’s take a look at the various ways the major countries in the two hemispheres are tackling the situation.
The MENA and MESA, towards Africa’s continental borders, preventive measures and caution are being exercised on different levels. Quarantine is important but we also need policies and safety programs. We need financial cushions and stimulus packages because we won’t all be able to work from homes. Because businesses are shutting down, it would be impossible to pay the rents and make ends meet. The UAE especially is worthy of note as it is continuing to develop more effective policies. To summarize the effects and measures taken by the East to fight the virus, let’ take a look at the following:
Effects of Corona on Real Estate:
There were countless plans underway even before the corona virus to progress real estate programs. Given the appointment of Dubai as the host of the Expo 2020, there were mass-scale developments underway to prepare for the global event. Although many projects were expected to be halted amidst the circumstances. However, the chairman of the city’s economic development stated that the projects are going to be put “on steroids”.
The major goal of the Middle Eastern countries was to make countless properties on rent and sale available. This includes the major UAE states, Abu Dhabi, Dubai, Oman, Qatar, Sharjah and more. All the middle eastern countries are continuing to build while fighting the Corona virus. The UAE is doing well considering its cut in crude oil prices and the shutdown of tourism and travel industries. Not to mention the drop of 10% shares of Emaar Properties PJSC.
Although some of the affected companies include the biggest developers of Abu Dhabi and Dubai, the country’s prepared for the worst.
The country’s even sending delegations to Iran and other countries in need of help. For its residents and industries, economic stimulus packages and financial aid programs are being formulated. Some of those can be listed here:
- Meraas and Dubai Holding announce a cumulative budget of Dh1 billion to fight the effects of the corona virus.
- UAE Central Bank has announced a stimulus package of Dh100 billion to offset the slowdown in the economy.
- Under “Ghadan 21”, Abu Dhabi is aiming to help small to medium enterprises to ease loan availabilities. The stimulus package amounts to Dh50 billion.
- Various programs offering rebates of up to 20%, exemptions and waivers of up to 25% on even land leasing.
- Aldar Properties are investing Dh4 billion to help their residents.
Although shutdowns and quarantine measures are in place, the West does not seem to be faring well. Italy, Spain, Greece and other European countries are in peril. Joining along with Australia as economic recessions and debts reach an all-time high. Billions in economic stimulus packages are proving insufficient to help governments make the best preparations.
Effects on Real Estate:
The UK exited from the EU which made the real estate prices in the region go higher. However, because of the virus, the market will sustain a heavy blow. Dutch real estate market is experiencing a 25% decrease in demands since the announcement of the global pandemic.
In the American context, big brands and billionaire companies are seeking rental cuts of up to 50%. Even after losing most of their outlets and stores down, they are unable to meet the costs of sustaining the business. Businesses and real estate owners are seeking tax exemptions from the state. Real estate brokerages are reporting huge downfalls of the number of scheduled showings. Even though some companies like Olshan Realty are reporting an increase in sales of apartments in Manhattan, the dollar value is not pointing to any positive changes.
Turkey is struggling to contain the virus because of its early outbreak in the region. Their focus is centered around the domestic panic. It seems to be the better option rather than the economic circumstances because that is fundamentally the right thing to do.
What’s to Happen Now?
It is still unclear as to what can be expected in the coming months. With some countries preparing for annual shut down and some only halting operations for the coming months. Fiscal metrics such as GDPs are proving unreliable as well. All in all, the whole world is trying to hope for the best while preparing for the worst.