“A global health crisis is forcing us to imagine a new world. With a strong impact also on the real estate sector and the service industry.”
Thus began the interesting report published in June by Real Estate Scenarios, which can be downloaded for free here.
In fact, the global pandemic has represented a shock not only from a health point of view but also from an economic point of view, affecting almost all sectors, including real estate agency, indiscriminately.
Unfortunately, we still know very little about the epidemic. There are currently no treatments or vaccines
So making predictions is very difficult because we are not even aware of the real possibility of a return of the infection next autumn.
Critical Tips to Start Buying Houses As a Real Estate Investor
The Real Estate Sector Is Confirmed As a Pro-Cyclical Sector:
As Scenari Immobiliari recalls, Real Estate confirms itself, once again, to be a pro-cyclical sector, that is, strictly connected to the trend of the economy in general.
“Real estate is behaving more and more like a pro-cyclical sector, closely linked to the trend of the economy: already a few days after the start of the pandemic, also due to the specificities of this crisis, a major collapse volume of transactions and there will inevitably be an impact on prices in the future. The sector usually suffers from crises in delayed and longer times than other sectors, but it also needs more time to get out of it. ”
This is not true for all services, on the contrary, some sectors have registered increases during the pandemic, and more generally, few are affected so much, and immediately, by market fluctuations.
On the other hand, if the economy – with due exceptions – goes into crisis, it is normal that the purchase of a property will be really difficult to complete.
The Most Affected Are Real Estate Agencies:
According to the analysis of Real Estate Scenarios, it is the real estate agencies that are most affected by the real estate crisis resulting from the pandemic, i.e. those companies that earn in proportion to the transaction prices or the rents collected.
Unfortunately, these realities suffer the crisis regardless of the quality of the services rendered because, it should be remembered, the pandemic did not produce a drop in demand, as happened in the subprime crisis, but a supply crisis.
All is not lost, fortunately:
“In some cases, the block has had a marginal impact: for example, the design activities, those relating to assessments or the administrative area were carried out remotely without particular problems.”
This ability to reorganize with remote and smart working has emerged to a greater extent in larger and more structured realities, confirming a great flaw in the Italian industry: the size of companies is too small, it is necessary to grow them to make them more competitive on the market.
The main operational challenges and concerns to be addressed
In its report, Scenari Immobiliari illustrates some of the main operational challenges and concerns that real estate service companies must face and resolve.
Some are directly linked to the anti-spreading measures of Covid, such as social distancing, the sanitation of premises, the correct use of PPE, and so on.
Very interesting is what concerns the strategic and managerial reorganization of the activities, to be carried out in a short time:
adoption of remote work for all roles that do not require a physical presence;
use of mobile devices and tablets to manage remote inspections;
e-learning training on new security tools or procedures;
design and implementation of customized digital solutions based on advanced technologies capable of guaranteeing adequate levels of security;’
identification of protocols and guidelines to communicate information and response plans to infectious disease outbreaks to employees and customers;
contingency planning measures to deal with potential prolonged downtime.
Post Covid-19 residential real estate:
When it comes to residential real estate. It is necessary to consider the central role played by real estate agencies. Which took a huge hit during the lockdown.
With the reopening of the activities. They had to reorganize the work, also focusing on new technologies (eg virtual tours) and digital communication, in order to guarantee a minimum of continuity and interaction with potential customers.
To learn more about this topic, we recommend that you read our article on future scenarios for Real Estate.
Conclusions
In their conclusions, the analysts of Scenari Immobiliari hazard a rather likely prediction.
“[…] if the impact of this crisis is really strong and lasting nature will mean that we will see a rethinking of traditional solutions for housing, work, trade, the transport of goods and people. There may be shifts in demand from overly dense urban centers to more peripheral. And less dense locations, in search of more spaces, greener, and nature. ”
The Best Real Estate Investment Opportunities in Multan
THE POTENTIAL IMPACT OF COVID-19 ON THE NEW YORK REAL ESTATE MARKET :
The shaking of the stock market reflects investor panic over the effects its spread has on the global economy. No industry, not even real estate, is safe. The New York real estate market with the COVID-19 pandemic pushes the same into an even deeper phase. Which is certainly problematic for those who have to sell. Can represent a rare purchase opportunity for those interested in the purchase.
The impact of Covid 19, on the other hand, is already visible in New York on the commercial lease side. Where potential tenants are becoming much more cautious. About closing new leases as tourism from Europe and Asia are temporarily blocked. This could lead to a reduction in rents in the short term. Similar dynamics could also occur in the context of trading.
Prices of Luxury Buildings in Manhattan:
during the fourth quarter of 2019 fell at the fastest pace since the financial crisis. Meanwhile, foreign buyers were already pulling out. These include Chinese buyers. Who represents an important part of that demographics (they spent approximately $ 13.4 billion on homes. In the United States from April 2018 to May 2019 – a decrease of 56% from the same period last year. Due to the fact that their government has tightened rules on how much money can leave the country, immigration rules in the United States have tightened and trade talks between the two nations have heated up.)
The United States, however, has suspended the entry of foreign nationals in an attempt to stem the spread of the virus, and this is likely to have an impact on the US housing sector. In fact, this could turn into rather rare buying opportunities for European investors, in terms of further reductions in purchase prices and less competition from the very wealthy Chinese investors.
In the last recession (2008), the stock market fell by 30%. It fell 30% this year, but in just 22 days. Making it the fastest decline in stock market history
Even faster than the decline of the Great Depression:
Trillions of dollars of wealth, which represent people’s savings and pension funds, have evaporated. The first real estate data are already showing a significant reduction in the number of transactions, of about 60%. Looking ahead and with the self-isolation and quarantine policies likely to arrive in most markets.
we should expect a much more significant reduction. In China, for example, transactions were reduced by 80-90% at the height of the epidemic. However with much more restrictive social distancing measures.
This is not just an economic recession, and moreover. It has different profiles than that of 2008 which was primarily a financial crisis . But a real stalemate from an economic point of view. The unemployment rate has soared, faster than any other time in our life. What we can hope for is a V-shaped recovery instead of a prolonged recession.
