COVID-19 Will Revolutionize the Real Estate Industry
In a matter of weeks, our lives have been dramatically changed due to COVID-19. Now, people can no longer socialize, work, shop, meet, or eat as they used to. The working world has quickly changed from causal to cautious travel, work-from-home mandates, and office closures.
Instead of traveling and eating out at restaurants, travelers are tightening their purses only to spend on the essentials - food, home supplies, and medicine - and having them delivered often to their home residence. Due to the severity of the pandemic, it’s obvious to see that COVID-19 has started to affect the real estate market.
Most real estate players have made the safety precautions to protect the health of their employees and tenants. The smartest will now think on how the real estate landscaping will be affected in the future and will start altering their strategies. Those that are successful at strengthening their position will do more than adapting: they will have taken bold actions to deepen the relationships with their investors, stakeholders, end-users, and employees.
The Real Estate Industry is in a Recession
When there is a global recession, investors should generalize the effects it could have on the real estate market worldwide. For instance, in the 2008 recession, the US was more severely impacted than Africa or the Middle East. Therefore, when making real estate investments, it's important to treat each business scenario separately; the specific property type, neighborhood, city, or country will vary as not every country will be impacted evenly.
While the majority of the world will be overwhelmed by the turmoil of the current pandemic, the proactive real estate investor will be searching for deals and opportunities in every market. The successful investors who know how to ride-out a recession won’t sit on the sidelines, but rather find out how to scope out new possibilities and create digital opportunities.
The Need for Digital Real Estate
Before the pandemic, the real estate industry has moved towards creating digital processes and enabled services for users and tenants. Due to social distancing, and lockdown policies on public spaces have increased the demand for digitization, through measures such as customer and tenant experience.
Within the residential real estate, players that have invested in digital leasing processes and sales - will quickly allow for future residents to find the right home for themselves.
While traditional real estate practices will have to keep their amenity spaces closed, creating a digital experience will involve digital-first experiences and products; telehealth, concierge services, virtual communities, on-demand services, and contactless access for maintenance staff, residents, and more.
As more users start to use digital alternatives, their expectations will be raised, and the players that can provide a post-crisis experience will remain ahead of the curve. These digital offerings will lead to high dividends in forms of superior customer loyalty and the ability to make new revenue streams while meeting the needs of end-users and tenants.
A New Definition for “Homes”
The COVID-19 pandemic has forced people to quarantine in their homes and slow down. As a result, the coronavirus has redefined tenants home demands and the value of a home. People want more out of their living spaces more than ever—more space outdoors and indoors, patios, decks, etc. As a result, people want a safe, comfortable place to call home, and to have it feel like home.
Companies are now allowing their employees to work from home permanently. With the increasing amount of people working remotely, expect home-offices to be a required amenity moving forward. There will also be a demand for touchless technologies in multi-family homes to help reduce the spread.
A New “Virtual Reality” for Real Estate
There's been a huge change in our work lives as working remotely has become more normalized. Coronavirus has forced people through multiple industries to adjust at a rapid pace. Industries that have been technologically behind had started to take everything online.
Real estate agents and investors have made adjustments in order to keep their businesses operating. Despite the quarantine restrictions that are set in place, the real estate industry has adapted well. Property managers, investors, and realtors have came up with methods to virtually rent, sell, and showcase homes. Through virtual presentations, 3D tours, online closing processes, and video streaming, the real estate industry has been able to stay afloat during this pandemic.
Short and Long Term Effects
Since the COVID-19 pandemic has shut down countries worldwide. Many workers and businesses that were affected by the pandemic are receiving relief checks to help offset the loss in revenue and income.
In the short-term, we'll see some deflation because the demand has been reduced significantly through most industries. For example, airplanes having empty seats, new cars crowding parking lots, etc. But as the stay-at-home orders have become more relaxed in May, the demand has started to slowly pick up, and we can expect an increase in inflation rates within the upcoming years.
For investors, this is good news as real estate tends to fight inflation. It helps raise property value and rents and can appreciate faster than inflation rates.
Government Intervention
After the pandemic, we have noticed a change in both large and small governments. To help stimulate the economy, government officials have provided relief packages. But with two months within this pandemic, more people are wondering about what’s life for the long-term and if more relief opportunities will come.
The essential workers have been in the frontlines since the start of the pandemic. The problem is that most of them are underpaid. Health care workers, grocery store clerks, trash collectors, and public transit drivers are high-risk industries. These workers will continue to struggle unless government intervention and relief are provided.
Conclusion
Due to the Coronavirus pandemic, we are starting to see changes within the real estate industry. Both digital solutions and market adaptation are required as the world enters into a digitized economy. As we conclude, the future of real estate investing will rely on making homes safer and more personable to tenants.
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