The new coronavirus, officially known as COVID-19, has had a multiplier effect across many major markets around the world. Reactions to the spread of the virus ranged from caution to complete panic, and with each new country reporting the infection, it is immediately questioned whether this place is safe to visit or live anymore. 

So how does coronavirus affect the economy? Coronavirus has a profound and dangerous impact on the global economy, and it has sent policymakers looking for ways to respond. China's experience to date shows that the right policies make a difference in fighting the disease and reducing its impact, but some of these policies come with tough economic trade-offs. 

The travel industry has been badly hit, with airlines cutting flights and tourists canceling business and holiday flights. Governments around the world have imposed travel restrictions to try and contain the virus.

Fear of the virus and the government's advice to stay home also has a devastating effect on hotels and restaurants.

Does it affect the global real estate market?

Yes, Housing is another sector affected by the coronavirus. For example, in the first week of February alone, home sales fell 90% year on year in 36 major Chinese cities and most real estate agencies are currently closed to the public. House prices in the country recorded the most moderate growth during the past year and a half. 

The US real estate industry had to take extreme measures to keep the market moving as well. The presence of the coronavirus has become a new obstacle to overcome in the luxury real estate sector in cities like New York, Miami, and San Francisco.

The federal government has suspended entry for foreign citizens who visited China in the past 14 days in an attempt to halt the spread of the virus, a situation that could affect the housing sector due to denying potential investors access.

And while foreign businessmen often check property investment online; however, investors have less incentive to buy real estate if it is not certain that they can visit the property. Therefore, in the short term, the virus can reduce luxury sales. Time will tell us if this will last.

Does it have an impact on Middle East economies?

Middle East economies

How does coronavirus affect the economy of the Middle East? The weekly real estate report of Al Mazaya Holding Company affirmed that the Gulf real estate sector, on the ground, is outside the scope of the global impacts resulting from the spread of the Coronavirus, because it is a safe haven.

The report pointed out that the data indicates the possibility of the tourism, oil and real estate sectors being affected by the spread of the Coronavirus and the panic surrounding it daily, but it has not yet recorded any impacts on the ground that may lead to a real decrease in demand with it. 

This comes at a time when specialized reports indicated that oil prices were stable at an average of $ 55 for the current year, which is lower than the average recorded during 2019.

 

Tourism

How did the pandemic affect tourism? And what is expected to come?

For starters, the pandemic has caused the postponing of one of the largest international exhibitions, Dubai’s Expo 2020. The aforementioned event was originally scheduled to commence on the 20th of October 2020 and end by the 10th of April 2021. Since the estimates showed that around 2.5 million visitors are expected to come to the city during the event, it has been rescheduled to open on the 1st of October 2021 and end by the 31st of March 2022.

Despite the rescheduling, the organizing committee decided to keep the name “Expo 2020” for marketing technicalities. The news of postponing the event surprised most people, because that was the first time the World Expo was rescheduled and because it was not canceled right away.

The pandemic’s effects on the annual Hajj is still unknown. The Ministry of Religious Affairs in the Republic of Indonesia has announced that it expects two scenarios for Hajj this year.

Scenario A being that Hajj takes place but with extra precautions and safety measures. To quote Minister Zainut Tauhid “Two scenarios are designated as anticipatory measures. The first one, the hajj will still be held by adopting restriction orders”

Scenario B is suspending the annual pilgrimage, which would be the first time for that to happen since the founding of the Saudi Kingdom in 1932.

Muslims, worldwide, await Saudi Arabia’s decision. Hajj’s cancelation would affect the Saudi economy since Hajj is the second highest income for the kingdom. Approximately two and a half million pilgrims attended 1440 Hijri Year’s (2019) Hajj. And the same number was expected for this year too, which explains Hajj Minister Mohammed Banten’s statement on the 1st of April 2020 that asked Muslims to “wait before concluding any contracts”. Umrah (the lesser pilgrimage) has already been suspended since the 4th of March 2020, which has affected the Saudi economy largely.

 

Commercial sectors

Commercial sectors 

Reports indicated that the commercial sectors will be affected by the extreme safety measures and restrictions imposed on movement, and the movement of individuals and goods, which will have direct effects on the volume of production and demand at the level of China and the countries with which it has partnerships and investment cooperation with, as the data circulated indicates that China imports between 4% and 45% of the total goods exported to the Gulf countries, with the largest share being to the Sultanate of Oman, while the trade volume between China and the Arab countries reached 224.3 billion dollars at the end of 2018.

For example, the company «Apple» global recorded daily losses during the trading by 2.6%, and the value amounted to 35 billion dollars, according to the report, as the disease limited the number of devices that can be manufactured and sold in China. 

As COVID-19 continues to affect national and global markets and economies, it is worth noting that Gulf economies were already slowing down before the virus struck the region.

The prices of oil, tourism, and capital markets affected by the coronavirus can have an impact on the Gulf economies.

COVID-19 and GCC Real Estate Market

In the past few years, The region started to encourage mega real estate projects in order to diversify their income from oil-based economies. And due to that, the GCC Real Estate investments have hit One Trillion U.S Dollars by March 2020. 

The market was estimated to bounce back during 2020 and 2021. And with Dubai Expo 2020 coming soon, the real estate demand was expected to skyrocket and create tempting opportunities for investors. But with the COVID-19 pandemic, have the estimates stayed the same? No one is sure about the effect of the pandemic on the real estate market.

Al Mazaya report indicated that the pace of real estate activities is expected to increase based on new stimulus plans targeting economic growth rates for the countries of the Gulf region, which are expected to remain at 2.3% and higher during the period between 2020-2022, which means direct support to the sector and greater impact and contribution In the GDP of each economy separately.

The report pointed out that the data circulated indicates the possibility of the tourism, oil, and real estate sectors being affected by the spread of the Coronavirus and the panic surrounding it.

UAE Real Estate Market

UAE Real Estate Market

How does coronavirus affect the economy and real estate market in the UAE? The United Arab Emirates is one of many affected countries, although panic is far from anyone's mind. 

As one would expect during any major crisis, there will be a short-term economic downturn. This is good news for home buyers and especially for investors, who can get a property in a fair deal and can expect to reap significant returns on their investments when the market returns again.

 

Indeed, you need an investment that you can count on at a time like this. Speculation about the full effect of coronavirus has led to huge losses for stock markets around the world.

 

Due to the unexpected nature of the stocks, these losses may become more severe before going up. Stable investment in bricks and mortars keeps you better protected in the medium and long term.

Bahrain Real Estate Market 

Bahrain Real Estate Market 

How does coronavirus affect the economy and real estate market in Bahrain as well? Real estate markets in the region are still going according to the actual and real impact factors until the moment when there is an increase in the supply.

 

Also, it is expected that the prices traded will register more price correction is slight and gradual rates ranging between 5% and 10% until the end of the current year, which is expected to give the sector And its trading more attractive and liveliness without stopping.

 daily, but until the moment it did not record any effects on the ground that might lead to a real decline in demand with it.

Saudi Arabia Real Estate Market

The Kingdom of Saudi Arabia has rolled out a total of SAR 120 billion to support the private sector during the pandemic.

One of the sectors designated to get some help from the government is the real estate market. The latest estimates expected that non-oil growth would register a growth of 0.7 percent in 2020. However, The postponing of expansion plans and market entry strategies will probably result in a negative impact on real estate activity in the country in the immediate future.

Also, Read:

Take a look at the top 5 real estate developers in the GCC

The Newest Real Estate Companies And Projects In Bahrain: The Full Guide

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