All industries have been affected since the COVID19 breakout. With at least half of the world living under quarantine and were asked to stay at home, the real estate sector experienced a tremendous slowdown. With people focusing on securing food and sanitation supplies, what could be the future of real estate?
As of March 2020, there was a substantial decrease in sales from the real estate industry and it continued in June 2020 as a result of a reduction in interest rates of residential and housing loans.
In the last quarter of the year, there are still a lot of challenges the real estate sector is experiencing due to the pandemic.
Loans and payments defaults
While the world is experiencing a pandemic and a recession all at once, a large number of individuals and corporations will fail to pay their rents and loans on time. Small to medium businesses are also struggling to keep their revenues up while paying their operating expenses at the same time and it highly impacted the paying capacity of every tenant and debtor.
Eviction Suspension
The pandemic hit the finances so bad but it didn’t stop the bills from piling up and many people are losing sleep over how to pay the mortgage. These lead to the imposition of suspension on evictions during the course of the pandemic.
On top of the eviction suspensions imposed, mortgage forbearance and rent relief for commercial spaces were also given. Those are a great help for homeowners but may not be beneficial for real estate in general.
Slower and Lower Growth
The real estate sector is still projected to grow although slower and with lower rates. While this is an opportunity for some people to acquire land or to buy the homes they have wanted for a long time, dues to less competition and lower prices, this is still challenging for the property market because only a few can afford despite the huge decrease in pricing.
Adapting to the new normal
With the imposition for social distancing to almost every place and the limitation for physical, face-to-face, and in-person events; showcasing real estate products and services has been a challenge. Instead of open houses and tours, the real estate sector is slowly changing its marketing strategy via a virtual approach. These virtual spaces are giving people alternatives. It may be a more comfortable and practical approach to tour properties while staying at home, but it is still different if you have a personal touch and experience with something. Adapting to this new normal is another challenge to the real estate sector as they need to make innovations to reach a larger market online.
It is not all lost in real estate although it is a not so good year for the industry in general. Companies and individuals are still seeing this pandemic as a growth opportunity as some are taking advantage of land and space lower rates. This can be attributed to the thinking that when the pandemic is over, the economy will slowly get back up, along with the real estate sector.
Even if the real estate market reactivates in the new normal and if office demands get scaled bac, real estate cannot simply get through the COVID-19 crisis without a significant evolution. Real estate investors need to rethink how to design property, build it, market it, and the most important - invest in it.
No comments:
Post a Comment