The COVID19 pandemic has been brutal to businesses worldwide and one of the most affected industries is the real estate industry. The pandemic has caused anxiety to millions of property owners and real estate agents worldwide as the world continues to shift to the new normal.
While there are a few countries that are starting to flatten the curve in terms of COVID-19 cases, we cannot expect economies to be better as long as there are active cases and governments are continuously taking precautions. This means we can say that the rest of 2020 will not be good for real estate and other industries.
Whether you are a real estate agent, commercial space owner, or a person who’s looking to buy a new house in the near future, here’s what you should know about real estate amidst the COVID-19 pandemic.
COVID-19 Brief Summary
The 2019 coronavirus or COVID-19 is a highly contagious disease. People infected with COVID-19 may feel flu-like symptoms. A person can recover without treatment but it can be fatal to older people with other ailments. As of writing, there are 7.69 million confirmed cases worldwide and 428 thousand deaths.
Global Impact on Real Estate
According to a study, the global real estate rental market was expected to grow from 1759.8 billion dollars in 2019 to 1787.8 billion dollars in 2020. The small growth is due to economies being affected by COVID-19 but it is still growth nonetheless.
The reason why real estate is badly hit by the pandemic is that the damage is accumulated from different industries. Food and retail for example. Since a lot of restaurants and other establishments are closed, business owners are unable to pay their lease. Some are even permanently closed and property owners are unable to find new businesses who want to lease.
Aside from that, unemployment rates in countries such as the United States and the Philippines, has increased exponentially making things worse. With people getting cuts from their income, the pandemic is the worse time for looking for a new home.
One area that is experiencing profits from the pandemic is the logistics and warehousing industry. E-commerce exploded during the pandemic as consumers are now opting to buy their products online rather than go out to stores with the risk of getting infected. More companies are acquiring new warehouse locations around countries in hopes of solving logistics problems and to satisfy the demand.
Low Office Vacancy
As more and more businesses are taking more precautions by transitioning to fully remote work, more offices are experiencing low vacancy. Businesses are allotting their resources in procuring equipment for their employees who are now working from home. This means less, if not none, being allotted for lease.
According to a survey, one third of employees that were part of the study said that they would prefer working from home permanently. Even though they are spending more on food and utilities, workers are happier and they feel more safe being at home rather than going to offices.
The rest of the people who were surveyed prefer having a hybrid working environment where half of the week will be spent on their houses and half will be in the office. This is because it is still important for teams to collaborate personally. However, this is still a bad trend for commercial space owners. Business owners may decide to reduce their office spaces with less employees going to work. Coworking spaces are suffering the same problems.
Recovery from COVID-19
Amidst the pandemic, trends are still looking good for the real estate industry. It is to be expected that online platforms are going to be used more for house listings. One of the trends is people are going to look for new homes outside the cities to prevent high population areas where they feel more safe.
Most real estate agents have not reduced their prices as well. The interest of those who are looking for new homes are still there but they are still holding on to their money in case the pandemic gets any worse.
For commercial space owners, some countries are now easing lockdowns and some companies are now going back to work. Businesses who closed down are expected to be replaced by new businesses that are discovered due to the changes of demand by the consumers.
It is still uncertain on to when the pandemic will end. It is safe to say that things will not look good until a vaccine is created to fight COVID-19. However, the real estate sector should not worry because it is one of the industries that is going to find a way to recover faster by adapting to new trends and through innovations. If you are a property owner or a real estate agent, the key now is to look forward into the future and be one step ahead of the situation.