{"id":19356,"date":"2020-04-30T15:44:18","date_gmt":"2020-04-30T13:44:18","guid":{"rendered":"https:\/\/www.weetas.com\/article\/?p=19356"},"modified":"2021-11-09T15:23:01","modified_gmt":"2021-11-09T13:23:01","slug":"coronavirus-impact-on-real-estate","status":"publish","type":"post","link":"https:\/\/www.weetas.com\/article\/coronavirus-impact-on-real-estate\/","title":{"rendered":"Coronavirus Impact On Real Estate Industry: An Overview"},"content":{"rendered":"

The real estate industry is being hit by the coronavirus, and it\u2019s going to get worse before it starts to get better again. Coronavirus impact on real estate will vary by sector and market, and the extent of the effects will depend upon the duration of the economic shutdown.<\/p>\n

The sectors of real estate that have been hit hardest so far are hotels, restaurants, cafes and other entertainment retail (particularly in tourist-driven areas) followed closely by retail and housing (particularly luxury homes).<\/p>\n

Supplies that the builders and developers need are being interrupted more and more as workers stay home. And due to business shutdowns, quarantines and curfews, huge numbers of layoffs will lead to a further contraction in consumer spending, starting a downward spiral of economic activity. Together, these forces are already pushing the economy into recession.<\/p>\n

While the real estate industry as a whole appears (at least so far) to not be affected to the same degree as the entertainment and travel industries, we can expect the coronavirus to have an impact on the real estate industry over the course of the next few months and years depending on numerous factors, such as how quickly the outbreak spreads, the duration of the outbreak, and the actual impact of the coronavirus on humans once we are able to analyze data from the inevitably larger sample size that we are certain to get. Even if the coronavirus is gone tomorrow, coronavirus impact on real estate industry could be significant.<\/p>\n

Coronavirus Impact On Office Sector<\/h2>\n

\"Coronavirus<\/p>\n

With more and more employers now encouraging their employees to work from home during the outbreak, employers are getting an unexpected preview of what a significantly smaller office footprint could look like in the future. Technology companies such as Zoom and Slack are being thrust into the spotlight as businesses try not to skip a beat with their employees working from home. If the technology companies can facilitate a work environment outside the office that delivers results for employers during this outbreak, then expect demand for smaller office footprints to accelerate as a result of the coronavirus.<\/p>\n

On the other hand, the demand for co-working spaces could decline significantly. As people try to avoid interacting with others in the office environment, the allure of leasing space in a co-working environment could diminish. The operators of co-working spaces will need to innovate in order to retain and attract new tenants.<\/p>\n

Coronavirus Impact On Retail Sector<\/h2>\n

\"Coronavirus<\/p>\n

Health experts suggest that social distancing and avoiding crowded areas can be a helpful tool in avoiding the coronavirus. If the population at large follows this advice, the immediate impact on the retail sector could be significant as people avoid grocery stores, shopping centers, and malls.<\/p>\n

But what will this mean long term? People still need food, clothes, and other essentials. And of course, they want other non-necessities. More and more people are already using online services to do their shopping from home. But there is still a largely untapped market of people who have never used online shopping. There will be a significant number of these people who try online shopping for the first time as a result of coronavirus fears. This could be a tipping point that forever alters some brick and mortar stores and how they accommodate the online consumer. As at-home and curbside deliveries increase in popularity, retailers will need to consider store sizes, layouts, and pick-up points when they design stores.<\/p>\n

Coronavirus Impact On The Industrial Sector<\/h2>\n

\"Coronavirus<\/p>\n

If online shopping becomes more prevalent as a result of the coronavirus, more industrial space will be required to house inventory at distribution centers. However, larger industrial spaces likely will mean more employees in close proximity to each other, so employers will need to be cognizant of how this will impact their operations during future outbreaks of the next major virus.<\/p>\n

So here comes some questions about coronavirus impact on real estate from several perspectives..<\/strong><\/p>\n

For property buyers, what do you need to know?<\/h2>\n

\"For<\/p>\n

In this environment, buyers who are in very secure jobs are actually in an improved position because the overall market is weaker. Coronavirus will take out a group of buyers \u2013 those adopting a wait-and-see approach or who are simply unable to buy due to reduced income.<\/p>\n

But there\u2019s another group of buyers: those who are in jobs but who face uncertainty about how coronavirus will affect their pay or whether they will keep their job at all. Many of these types of buyers will be taken out of the housing market for now.<\/p>\n

For property sellers, what do you need to know?<\/h2>\n

\"For<\/p>\n

If you\u2019re a seller, you need to appreciate things are going to be weaker. Those would-be sellers who have flexibility will be able to defer and that could cushion prices falls. There will still be people who need to sell for whatever reason. The turnover will decline but there will still be properties coming into the market.<\/p>\n

For property investors, what do you need to know?<\/h2>\n

\"For<\/p>\n

The market has been getting more difficult for investors. The market in, for example, Sydney is oversupplied at the moment and there\u2019s already been some downward pressure on rents. Yes, investors can benefit somewhat from the decline in rates but that benefit is offset by declining rents.<\/p>\n

Then, along comes coronavirus. The weakness it is causing in the economy will accentuate the downward pressure on rents in the short term and that\u2019s something investors need to be cognizant of. If prices come down, investors could be in a better position to buy (to create or add to an existing property portfolio) but that weakness in rents is a real factor \u2013 it has been for some time and is unlikely to go away any time soon.<\/p>\n

A rebound in 2021<\/h2>\n

\"A<\/p>\n

2020 will be a hard year for the economy. Talk of a recession is growing and while the big companies may not lay off a lot of people, a lot of small businesses are facing the prospect of low to no revenue. They may have no choice.<\/p>\n

The financial capacity of small and medium-sized businesses will be harshly affected. If you\u2019re a restaurant, for example, and nobody is coming in, you may have no option but to reduce staff or close. The stimulus package is well-targeted but there\u2019s no stimulus package in the world that could stop some of these effects from happening.<\/p>\n

People will recover. People will go back to restaurants. People will go to football games. Things will eventually bounce back. Things will go back to normal eventually – but there will be some business casualties along the way.<\/p>\n

Also Read:<\/h3>\n

For landlords: What to do if a tenant doesn\u2019t pay rent or pays late?<\/a><\/h2>\n","protected":false},"excerpt":{"rendered":"

The real estate industry is being hit by the coronavirus, and it\u2019s going to get worse before it starts to get better again. Coronavirus impact on real estate will vary by sector and market, and the extent of the effects will depend upon the duration of the economic shutdown. The sectors of real estate that […]<\/p>\n","protected":false},"author":17,"featured_media":19480,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[655,881],"tags":[],"_links":{"self":[{"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/posts\/19356"}],"collection":[{"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/comments?post=19356"}],"version-history":[{"count":7,"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/posts\/19356\/revisions"}],"predecessor-version":[{"id":20974,"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/posts\/19356\/revisions\/20974"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/media\/19480"}],"wp:attachment":[{"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/media?parent=19356"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/categories?post=19356"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.weetas.com\/article\/wp-json\/wp\/v2\/tags?post=19356"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}