There is no denying that the corona virus pandemic has had a massive impact on almost every industry that exists. Business that deal with essential items, in particular have been struggling to generate as much money as they used to before all of this started. It would even be fair to say that there is somewhat of an economic crisis on the horizon because of COVID-19s detrimental impact, but what about the real estate industry? Quite a lot of people have been wondering if the real estate market has taken a hit because of this pandemic. Well, that is what we will precisely discuss in this article, making sure that you learn about the current situation concerning real estate.
You will be surprised to find out that the real estate industry happens to be one of the rare exceptions that has not been impacted because of the corona virus crisis. Of course, there have been a few changes here and there but all in all, the real estate industry remains relatively unaffected. It is an excellent piece of news for long time as well as aspiring traders. The last thing investors and brokers need in their lives is the prices of properties going down but with the news that the real estate market is still somewhat flourishing, these people can rest easy.
Do you also happen to be someone who is interested in the real estate world? Well, there are plenty of others too. All of you will most likely be keen to find out how this industry works and what you should do in order to make it big in this industry, especially during these times. Well, there is no need to worry as we will go into extensive detail regarding what you will need to do in order to achieve success in the real estate world.
It would be fair to admit that the corona virus pandemic has bought about a fair bit of change in every industry and the property landscape is no different. People have to be more vigilant and make sure that they avoid any pitfall that comes along with it. You will be surprised to find out how many people have unknowingly sold or rented their properties only to find out that they were violating various regulations later on. It would be best to steer clear from issues like these and make sure that everything you do is according to the necessary procedures.
For this, you will need to make sure that you educate yourself extensively; even if that means that you have to reacquaint yourself with the fundamentals. Why? because quite a lot of times people tend to forget about the basics which is often the reason that leads to their downfalls. So once again, take all the necessary steps and ensure that your real estate buying and selling procedures are completely legal and do not have any issues. It will help keep you in the clear and prevent further hassle down the line.
Is this an Ideal Time to Deal in Real Estate?
Quite a lot of people wonder if investing these days would be ideal. They ask this question for a variety of different reasons. However, one of the most common reasons behind asking this question is simple. They want to know if there are any chances of earning massive profits. For those who do not know, real estate dealers, especially the ones who have been in the industry for a long time, earn sizeable amounts of profits. It is a big reason why it seems like an attractive opportunity to everyone. As mentioned earlier, the corona virus pandemic hasn’t had much of an impact in the real estate world. As a matter of fact, if you look around, you might be able to find opportunities that could earn you loads of money, keeping all of that in mind, it would be fair to say that it is indeed a good time to deal in real estate. Sure, there will be a few pitfalls involved with it here and there but they are pretty common during normal times to. So, you can go ahead and sell and rent properties, knowing that you can indeed gain money if you are knowledgeable enough. That being said, this does not apply for everyone. People who are new to the real estate world should especially take it easy. As demotivating as this seems, think of it as a blessing in disguise.
Your lack of knowledge could get in your way and create serious issues. So much so, that you can end up facing massive losses. This is the last thing any aspiring trader wants to face. So, it would be best to take a step back and reevaluate your situation carefully.
Guy Galboiz, businessman and entrepreneur:
“If you talk to any real estate expert, he or she will tell you that entering this field without having a great deal of knowledge could massively backfire. So what should you do? Take this time to sit back and understand the ins and outs of real estate. Sure, this may seem like a tough task initially but it will ultimately prove to be a game changer when you get ready to join the big leagues. You would be surprised to find out that quite a lot of high profile real estate brokers used the same process in order to make it big. So, there is no reason that you cannot do it either. It will give you an opportunity to sit back and evaluate or re-evaluate all of the choices that you have made. Once you have a clear path that you need to accomplish, things will get remarkably simpler and help you understand the importance of learning the fundamentals. COVID-19 or not, real estate will always remain a complicated field. What’s more, there is always something that you can learn in it. So why not start now? It is an excellent may to make a mark once you get started.
COVID-19s Impact on Real Estate
The corona virus pandemic’s affect is a lot more than what some people have been assessing. Because of the unexpected nature of this pandemic, there have been no shortages of turn-offs. They are happening in different parts of the world, which has of course led to massive economic congestion. The lockdowns imposed across the nations have shaken most of the real estate sectors. For those who do not know, the real estate sector is arguably the most profitable economy and while it hasn’t been affected as badly, has taken a toll as well.
Real Estate Industry Changes
As you would expect, there have been massive changes occurring in the industry. You would be surprised to find out how notable some of them are. They are discussed down below:
Labor Related Issues
Issues regarding labor have been a massive problem caused by the corona virus crisis. Why? because a large number of people are presently in lockdown, trying to protect themselves as much as they can. So, issuing labor remotely and trying to employ them without actually meeting and judging them is proving to be a bigger hassle than what people initially thought. Real estate agents believe this to be a massive deal breaker. Why because the corona virus crisis has led to a significant supply shortage over the past few months. Not only that, the manpower has also been on a significant decline.
Finance and Business Impact
One thing is for certain, and that is – COVID-19s impact has bought about a monumental shift to finances as well as businesses. For those who do not know, these are arguably two of the most massive things that dictate the economic condition of any nation. So, there has been a significant amount of disruption as of late and has also created disturbances to the way people normally work. For instance, as the pandemic continues to spread, a large number of the industrial sectors had to face major losses. This led to shortage supply, which created a sudden halt of tons of essential requirements.
What’s more, the high profile companies have been shutting in constantly, and it has led to major disruption in the way small agents function their finances and their businesses.
Impact on Work
Praising the clients is what real estate is all about. It is a significant reason why so many people enter this industry. They know fully well that saying the right things and taking the right steps can help them earn significant amounts of profits. Choosing their desired property is also another thing that you should be mindful of in the real estate world. In case you did not notice, people’s work is being heavily impacted due to this crisis on a day to day basis. Why? because a significant amount of people have been working from home and it seems like they will continue to do so in the days to come. As most of you will probably know, real estate is all about making sure the physical world is engaged, it can be a massive pressure on a lot of agents to highlight the new estate and the land to their potential customers.
An Ever Changing Scenario
As you would expect the COVID-19 crisis has been causing a massive ruckus for each and everyone in the world of today. Unfortunately, this will continue to be an ongoing scenario where a large amount of sectors will continue tumble down day after day. As the economic halt remains since the lockdown’s issue, a large number of sectors continue to suffer major losses and face doubts as most investors have been faced with a gigantic financial drawback.
Guy Galboiz states:
“It would be fair to brand COVID-19 as a human challenge. It could affect the way people play, work, and do plenty of things for the years to come. This is why it is important to make sure that real estate leaders start taking action today as they are best equipped to serve users while also securing their viability. The lives of tons and tons of people have changed in a matter of a few weeks. Would anyone have imagined that this would happen to them? Not at all! Sadly, the COVID-19 crisis means that people can no longer socialize, shop, eat, work, or do any other thing that involves someone else’s company. As the crisis grows, the working world is rapidly moving towards the days of old but with extra caution. Offices are beginning to close and people are working from home. Plus, there have been tons of travel restrictions which have been a major contributor for slowing things down.”
The Changes Caused by Physical Distancing
There is no denying that social distancing has had an impact on the way people interact and inhabit their physical spaces. The effects of the outbreak have increased the demand for extra space as people try to distance themselves from others in order to protect themselves from the virus. It is a unique predicament and there has not been anything like it in modern times.
However, this has created a sudden issue for the real estate industry as well. Sure, there is the immediate challenge that real estate investors will have to tackle, but there is a lot more beyond it as well. Expect to see tons and tons of transformative changes that could go on and last for a lifetime. In order to give a response to the present threat of this pandemic, and laying the necessary groundwork for dealing with some permanent industry changes, it would be best for every real estate leader to take swift action. Some pieces of reports suggest that many plant to start centralizing cash management in order to pay more attention towards change and efficiency. It could help them create a better portfolio and make better decisions regarding capital expenditure.
Some people might even feel more urgency than ever before when it comes to digitization. Why? because it could lead to a distinctive, and overall better customer and tenant experience. Also, as the crisis continues to impact the ability of commercial tenants in making lease payments, quite a lot of operators will have to make a large number of decisions for various situations instead of deciding only a select few portfolio related decisions.
Real Estate Players Must Act
The real estate industry is only for people who have the ability to make smart and timely decisions. So, if you plant to continue selling, buying and making properties during this pandemic, it would be best to prioritize the health and safety of your tenants and employees. You must also make sure that you are able to use your space in the most effective manner.
It would also be ideal to think about how the landscape of real estate could change. Some pieces of reports suggest that the changes could be permanent. This means that traders will need to make alterations to their strategies accordingly. Those who succeed in making their positions stronger during this crisis will achieve a lot. There are high chances that they could go way beyond simply adapting. All of the bold actions they take will help to make their relationships deeper with their investors, users, employees, and a variety of other stakeholders.
Immediate Real Estate Challenges
Over the past few years, there have been immense cash flow generated through real estate investments. The returns were tremendously high and were more than what real estate dealers used to make back in the day. Sure, there was a certain level of risk involved in all of this but the excellent returns were hard to deny.
Galboiz explains: “The coronavirus outbreak has made a massive difference to how things are done in the world of real estate. It would be fair to say that most players in this game have taken a hard hit in terms of value. What’s more, a large number of service providers have been struggling terribly when it comes to reducing health risks to keep their customers and employees safe. Furthermore, a large number of developers are finding it increasingly difficult to get permits. Because of this issue, they face tons and tons of stoppages, construction delays, and other issues. This leads to shrinking return rates and low profits. Meanwhile, several asset operators and owners face a significantly lower operating income. Sadly, almost everybody has been nervous about their tenants. Why? because they are aware of the fact that they could face difficulty when it comes to making payments.”
Galboiz is right, the terms abatement and concession are becoming increasingly popular in the real estate world. However, dealers are hard at work and trying to make sure who these things apply to and what should be the exact amount. Also, it is worth noting that not every real estate asset performs similarly during the corona virus crisis. It would be fair to say that the market has pivoted a great deal even more than its usual length. Assets having higher human density tend to have suffered a major hit. Student housing, lodging, regional malls, healthcare facilities and plenty of other places have been sold very quickly. However, there have also been quite a few properties that have not faced a decline as significant as this one. Data centers, industrial facilities, self-storage facilities, and plenty of other locations have not been hit as hard as other areas.
Keep an Eye on the Behavioral Changes
Real estate operators and owners across almost each class of asset are seriously considering a variety of the long-term effects caused by the pandemic. They are also closely analyzing the shifts that these effects could bring and their future impact. Let us use the example of a commercial office space. The emerging trend of open plan layouts and densification could reverse quite sharply. What’s more, public health officials could start amending building codes in order to limit the chances of another pandemic occurring. It could potentially make a huge impact on the HVAC standards and plenty of other things such as closed space.
Meanwhile, as more and more baby boomers continue to reach independence, the fear of pandemics and outbreaks like the corona virus could hold them back from moving out. They would refrain from investing their money on properties and would instead live with their families. It is also worth considering that the need for senior living properties could reduce. Either that, or the product could go through a massive change with more special preferences along with various other operational requirements.
There is also a massive possibility that senior care facilities prove that they are able to best handle outbreaks. It could significantly accelerate demand and help real estate dealers make a considerable amount of money. The corona virus pandemic experience could bring about a permanent change in people’s investing habits and impact real estate demands in the long run. Short term leases and hospitality related properties in particular could undergo a massive change.
What About the Consumers
Consumers who have no other option but to start shopping online because of the lack of open shopping centers or malls could permanently make changes to their buying habits, especially when it comes to e-commerce. Before, the corona virus pandemic hit, consumers were already starting to shift their spending habits. They showed a greater inclination towards buying from physical stores. Because of this, the long-term trend could significantly accelerate more quickly and go well beyond the crisis. The e-commerce shift could also boost demands for more industrial spaces. Does this mean that these things are bound to happen? Not at all! However, there is a huge likelihood that this could happen, which is why everybody should be prepared for the changes in case they do come.
That being said, it would be best to start making adjustments to your real estate dealings in order to make sure that your property buying and selling habits are totally in line with the current situation caused by the COVID-19 pandemic.