The COVID-19 pandemic has had a considerable and unexpected effect on all facets of people’s lives, with 2.6 billion people across the world now living under some sort of social constraints (lock-down). The pandemic has left no industry untouched and every sector including real estate is being affected.
The global economy is currently in an unprecedented state and the period of its recovery is difficult to ascertain. There has been, however, no global joint policy response to this pandemic, individual countries have not relented and have taken major steps to buffer their citizens and economies through these times.
In the real estate sector, we can see that the pandemic has begun affecting a huge segment of this industry. The commercial real estate owners have made so much money collectively a year as the economy blossomed. Now, they are feeling the heavy blow dealt by the pandemic-fueled economic crisis and this industry might be changed as a result.
With the compulsory lock-down enforced in major cities, most corporate chains may lose a large number of its clients since everyone is now working remotely and a majority are getting used to this change. In addition to this, endless restaurant businesses and small retail may be forced to vacate their commercial spaces because they can no longer afford them. Hotels, malls, restaurants and luxury homes are currently empty.
It’s very possible the commercial real estate market will never look the same. The demand for corporate chains would certainly falter if the pandemic doesn’t come to an end.
Residential real estate sector right now seems like one of the most viable real estate investment opportunities at this period owing to the constant need for shelter. The need for shelter would always be in demand, there will always be the need for relocation, and the need for a sustainable living would always provide room for growth in the residential real estate industry. A lot of people would make choices on where they’ll reside immediately after the pandemic.
This however, does not mean that the residential real estate industry would be spared totally from this storm. Property owners need to prepare for what is to come, there would be a large number of tenants who would be experiencing pay cuts or possibly lose their jobs. Various countries are helping their citizens buffer the effect of the pandemic by halting rent payments till this is over. Countries like France have suspended rent and utility bills payment, the US is trying to get the congress to pass a 90-day national rent moratorium – suspension or rents temporarily.
Now unless the government decides to step in and help its citizens cushion this effect, landlords would have to make do with rent-relief requests. Where does it leave landlords who depend on revenue gotten from their properties for survival? We may see another turn in global housing approach as the need for shared homes may begin to spike.
Can we find a rainbow in the midst of all this storm? The answers to these questions depends on how long the social distancing will last and how fast we adapt to the change in the tides.