Disasters and pandemics are exceptionally impactful on the real estate sector and on most non-life-maintaining sectors of the economy. As per Maslows scale of needs, the food and telecommunications industries – basic for human survival – at such times receive all focus and are most positively impacted. This is expected, seeing that life is necessary to maintain life.
To maintain life therefore all players in the real estate value chain (developers, agents, brokers, property/facilities managers, valuers/appraisers, contractors, professionals in the built Industry) who are unable to ply their trade in the normal fashion, must have to reinvent their businesses for continuity post pandemic.
Prolonged downtimes and off site activities by contractors as a result of enforced government quarantine (though necessary) impacts negatively on real estate supply, as follows:
- Delayed delivery time, which may exacerbate the existing housing gap.
- Real estate values will respond to a supply shortfall, which may spiral if no effective demand, backed by a conclusive demand exists, as a result of projected economic downturn.
- Inflation, with its implications on material supply, labour and loans costs.
- Possibility of loss of profit, as contract terms would not have contemplated a pandemic and would then not have been covered under “force majeure”.
The industry will outlive the pandemic
There is existing demand for all types of accommodation, which must be met after the pandemic. The construction industry is crucial to economic recovery efforts, and our ‘new’ way of life. Social distancing, working from home, extensive use of internet platforms, may minimally affect the commercial real estate sector, but may be a boom for residential and commercial and large retail sectors.
As dire (due to little or no generated income) as the present situation with COVID19 may seem, for the property sector a great deal of opportunity presents itself. This is especially relevant to the future-minded who are able to use this downtime to learn and innovate, leveraging on technology to remain visible and relevant.
A tip here would be to take advantage of social media. As people are home, they consume digital content more voraciously so now would be the time for industry practitioners to capitalise on their knowledge, experience and/or charisma to produce videos, podcasts, articles and infographics that are informative, educative and/or entertaining.
The new paradigm may well be an opportunity for professionals in the built industry, to dig into their wellspring of talents to produce outstanding, smart, energy efficient structures that promote or allow for owners/occupiers engagement in healthy behaviours. Types and designs of the built environment, (infrastructure, houses) have a direct effect on public health, and this pandemic demands new ideas and focus on designs that accommodates healthy home work and play environment.
Real estate is ultimately not a virtual product
There is a lot of literature on the internet on how realtors can make money or maintain their business contacts under these circumstances. Few can be said to be appropriate for a robust real estate transaction, from land acquisition, to construction, to occupation of completed structures. This is due to the nature of real estate business – a time and cost intensive venture which does not lend itself to full satisfaction from extensive virtual trading. While it is recommended that real estate players employ IT tools and platforms (like focalagent, Viewber and PayProp) to expose, communicate, track and share their product, draw new clients and maintain existing ones, these tools are great marketing, and preparatory aids to the real deal. Virtual transactions can not fully replace actual physical construction and inspection/viewing of developments. Defects and the “right feel” are visual expressions and can only be detected during an inspection, that can reveal the ACTUAL state of Real Estate.
That is why it is named “REAL” I suppose.