Real estate investing has overtime always been a safe haven for investors, but how true is this during a pandemic? There is a connection between the real estate industry and the economy which can never be overemphasized.
With the crash in oil prices, the rise in inflation, the crashing exchange rate and the increasing interest rate, there is a need to be greatly worried about the property market.
If you have been considering sinking funds in real estate, you might want to consider what the pandemic means on your investment plans.
What challenges exist for real estate right now?
With a growing number of coronavirus cases across the country, the real estate industry is taking a hit. The market has slowed down significantly pretty much everywhere as the pandemic prompts people to stay at home. The impact of coronavirus on once-hot real estate markets is one of many emerging economic narratives of the pandemic era.
The challenges with the real estate industry vary on the sector, the commercial real estate sector is currently experiencing a low flow of cash owing to the drop in demand of office spaces, rental shops and malls. The rate at which Physical offices are demanded have fallen significantly as remote working has been adopted, landlords with exposure to short-term leases would be the worst hit. Co-working space operators are at higher risk and the hospitality sector is not left out as it is experiencing short-term volatility with low occupancy rate.
At the same time, inspections, and home tours are all affected by social distancing initiatives and stay-at-home mandates. Companies that are not digitally equipped would be greatly affected by the global pandemic.
Are There Promises in Investment At This Time?
Well, there are speculations that the world would live in a new reality after the pandemic. The way we live and exist would change significantly. Real estate plays a big role in the facets of our existence, so there would always be a promising investment opportunity there. While commercial real estate and other real estate factions are experiencing a huge decline, there are a few opportunities that can be explored during the post-COVID era;
- Residential real estate: The residential market will remain resilient to the effects of COVID-19. Demand for new homes and rents may rise as people may be seeking more sustainable homes post- COVID-19. This is a rather obvious investment opportunity as there would always be a need for shelter regardless of a pandemic or a recession. In order to work from home, a home would be needed, people will need more space for a home office and general comfort. The rental market holds the biggest shares in the real estate industry, if you are looking to invest in real estate, this is a great time to invest in rental apartments
- Landed property: One highlight about land investments in the right location is that it appreciates over time and its value is not affected by pandemics or inflation. If you are considering investing in this uncertain time, this is one way to go.
What does the future hold for the real estate sector?
One can’t really predict what the future holds in terms of the pandemic and the world but one thing to note is the real estate industry would change its ways of operations. Technology would be adapted and smarter ways of carrying out transactions would be adopted, smarter ways to deliver on affordable housing would need to be adopted by developers.