We NOW all know about the novel coronavirus’s sad reality that it is spreading like wildfire to every nook, all around the world. And as there is no medication and vaccination are available, so chances are strong that it will continue to spread until the development of any savior drugs.
Social distancing and lockdown to restrict the spread of the coronavirus pandemic have mired most of the businesses all around the world. It has triggered the global stock markets to crash, which means any business can be affected, including the real estate.
As the effects of COVID-19, activities in the real estate sector are severely stuck in many ways. To preserve the capital investment, liquidity, asset’s value will be a big challenge for real estate marketers. To keep tenants, occupiers, and visitors safe along with complying the government rules and regulations are other things to worry about. Real estate market is likely to witness a significant drop in housing sales, engagement of office spaces, either rental or buy/sell owing to the impact of Coronavirus pandemic.
Before coronavirus pandemic, real estate businesses and real estate branding agency were at the profitable side; their base fundamentals were strong and working fine. Looking forward with hope, real estate leaders are trying to understand the situation carefully with some key questions/points:
- How quickly the recovery is possible after the pandemic is over?
- What would be the effect on the valuation of assets?
- Is it going to change the mindset of people on investing in real estate?
- How the pending capital investment, acquisitions, and development will be dealt, also what would be the repercussion?
- How to invest the available capital?
- How to create potential opportunities to lure real estate investors again?
- How will this influence the liquidity in the market?
- What will be the impact on debt contracts for owners and tenants?
5 Ways That COVID-19 May Impact The Real Estate Market
1. Due to COVID-19, everyone is in lockdown. The first impact is on the job, some are working from home, and some are losing their jobs. Job loss leads to the slash in domestic income and thus forcing people to prioritize their necessity. When there will be no job, how can one think of owning a home or office? Due to the severe recession, real estate investment would be the last priority; in fact, the investment priorities will change.
2. It’s the game of demand and supply, leading to the drop in demand/need for houses and offices. In case the people who have savings and some extra funds to invest – they too will not spend due to insecurity of losing their job, they will keepsake their money for the essential needs like food, hospital, education. Those are new to jobs, will be reluctant to buy due to future insecurities – like losing the job, or taking hefty loans from banks, or paying huge interest to banks. New investors rely entirely on bank loans, but due to this pandemic now they will hold their plans, say for 3-5 years.
3. The offices which are on rent will suffer in many ways. If someone’s business collapses or has very minimal income – to hold the office rental will become tough, either the occupier will leave the rental office or will not pay the rent. The owner’s loss will be the stuck rental money, finding a new occupier is a fortune; the new occupier will try hard to negotiate the terms and cost. If the office space is on loan and the owner is paying interest to the bank, he has to face another issue. Intermediaries/brokers will also face certain obstruction.
4. The direct impact would be a total collapse – no new construction, leading to job losses to casual laborers, impacting building materials such as cement industry. When there is no demand and no supply, all will be trapped under this vicious cycle.
5. Demand for flexible workspaces may rise – depending on the nature of business and to reduce operations cost, telecommuting, and assigned/designated timings may become the new rule.
To sum it up, this is the time of pandemic when we are in a house arrest, working from home, many losing their jobs, many businesses on the verge of a breakdown, nothing is certain, every business is suffering. It will take time to back to the success road. When things are in grip, every industry starts to function, so the real estate industry will. Those who have the needs they will invest and buy home or office. It’s just a matter of time. Social media is playing a significant role in spreading awareness and who knows social media marketing for real estate can help to turn the market upside. So, let’s keep our hope high.
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