With the current pandemic forcing around a third of the global population into lockdown and affecting a huge proportion of industry, there is no doubt that many long-standing operations and processes have been permanently altered.
Most countries have experienced significant market stagnation, not least within their real estate sectors. In the UK, while the government has pushed to keep interest rates low, the Bank of England has halted mortgage lending.
Due to safety concerns and social distancing requirements, a great many development projects have ceased activities too.
But what will happen as restrictions begin to be lifted and communities begin to operate once again? What impact will the post COVID-19 environment have on the global real estate industry – and what will be the “new normal” when it comes to property investment and development?
In many countries, job losses and income cuts may lead to a lack of spending among the general public.
Of course, in many cases, governments have encouraged landlords and mortgage lenders to offer “payment holidays” and other reliefs to tenants and residents, while companies have received support in order to furlough their employees, but many individuals have slipped through the gaps.
After any major negative economic incident, a conservative attitude towards money and a drop in spending is almost inevitable among the global population.
Caution and uncertainty, due in part to the potential for a second peak of infections once lockdowns are lifted, may mean that prospective property buyers, sellers and investors could be slow to take action in the immediate aftermath.
In the UK, it is predicted that 2021 will see an uptick in property-related activity – although this depends heavily on the country’s success in keeping the virus at bay and the speed at which banks are likely to resume lending.
As restrictions are lifted, the government of each territory will work with industry leaders to determine safe, effective ways in which operations can be resumed. So what might the “new normal” look like for the real estate industry across the world?
It is possible that there will be a reduction in overseas travel – meaning investment in the likes of holiday homes may drop.
Instead, there may be greater investment in “staycation” residences that are carefully managed so that good hygiene standards can be maintained.
A fall in the number of international students attending university is also likely, which, along with a potential dive in the number of higher education attendees overall resulting from the impact of COVID-19 on schooling and finances, could lead to a lessened requirement for HMOs and other types of accommodation in university towns.
This is not to say that overseas investment will dry up altogether, however; merely that attention may be turned to other types of project.
Planning for the Future
There are plenty of lessons to be learned from each country’s experience with COVID-19.
There is a strong possibility of greater investment in the development of medical facilities, while retail firms may look to the redesigning of their infrastructure to make it more flexible. This could include changes to the layout of stores and the capacity and functionality of delivery depots.
New office spaces may be designed too, with a focus on flexible working to aid in social distancing. It is possible, for example, that remote working will remain a popular approach – so offices might be designed with smaller capacities, making it possible for more businesses to populate a smaller footprint.
Regarding housing, new developments may be created with greater focus on distancing. Currently, urban areas in particular contain high numbers of densely populated flats and estates with shared corridors and lift access, in which infections can easily spread.
High rises provide little opportunity for their inhabitants to spend time outdoors safely – many have no balconies, and communal gardens and courtyards can quickly become overcrowded.
Real estate professionals must also consider the changes that must be made for their industry to function well during any future pandemic.
For example, the reinforcement of the safety of supply chains and the capacity to seek out alternative options may be improved, while new health and safety guidelines for construction teams, estate agency employees and other key or public-facing workers could be implemented.
It’s likely that social distancing rules will be in place for a little while which could potentially cause practical issues when simultaneously transacting properties.
Of course, it is extremely difficult to pinpoint the precise nature of the changes that will take place after COVID-19. The contributing factors will include the speed at which infection rates drop and the actions that individual governments decide to take when it comes to lifting restrictions.
However, the “winding-down” of lockdown measures is likely to provide significant opportunities – not just for the resumption of each territory’s real estate industry, but for the improvement of existing infrastructure and the implementation of intelligent changes to health and safety and the functionality of commercial and residential buildings.
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