New Year's is synonymous with the monumental milestone of setting resolutions to improve our lives, productivity, health, and well-being - highly anticipating the prosperity and joy the next 365 days will bring.What we didn't know in December 2019 is the next New Year's would not be ordinary of our expectations. With the turn of the decade presenting humanity with natural disasters and political instabilities, the apocalyptic nature of 2020 continued to take us by storm with the declaration of a global pandemic.
COVID-19 raised the concerns of billions of people around the globe. Organizations such as WHO and UNICEF believe that COVID-19 still presents a worldwide degree of uncertainty. The virus has spread exponentially around the world in a matter of months and silenced all other global crises as the most commonly shared concern that requires immediate action by international organizations and the global population.
We cannot underestimate the effects of COVID-19 as there are no vaccines or medications available. The only absolute measure to protect ourselves is avoiding exposure to this deadly virus. The chance of being subjected to this disease is high because the novel coronavirus can stay alive even in a lifeless environment for a long time. We know that people who have tested positive to the virus can develop an immunity against it but remain unclear what the duration of the immune response is.
The COVID-19 outbreak caused immediate effects in global finance and business. International supply chains are interrupted significantly. With social distancing measures enforced by governments and communities, industries such as airlines, tourism, and entertainment have seen drastic halts. Also, the Stock and Capital markets remain in a volatile state, indicating a global economic crisis.
So, let's see how this affects the Real Estate industry from the core.
Real estate agents were also deemed essential workers, but only to close the deals which were already in progress. They were not allowed to have in-person showing or staging of any real estate. Government asked landlords not to evict the tenant for non-payment but rather work out a payment plan – This meant reduced cash flow for landlords.
Alongside the metropolitan regions, tourist cities are prone to high impact, which has to drop the occupancy of hotels. Also, conference centers were to be closed due to a lack of utilization. All Pre-planned sports events were canceled or postponed - this will cause further dampening of the local economy of the hotel's restaurant. Short-term rentals have seen a decline in occupancy rates even as we enter the second half of the year. Many online and remote work companies saw an increase in the sale while Real estate-related tech companies like Airbnb saw a dip in stock prices.
Many companies like twitter & UiPath decided that remote and work from home arrangement is better for them and, as such, canceled many of their office leases. We would most likely see many of these office spaces turn into co-working or shared office spaces in the future. Multi-family may have seen an issue with cash flow, but the Vacancy rate may not have changed much. The industrial sector, on the other hand, has seen some increase as more governments prepare for locale PPE manufacturing and warehousing.
The efficiency of streamline project management for constructions will be hurt due to the delay in supplies and sudden start and stop commands due to the quarantine protocols taken by states and municipalities.However, among all those negative anticipations, the positive factor we can find is that there will be a decrease in the interest rates for properties and homes. If we look past the panic, this presents a great opportunity for people to choose their favorite property for a home at a lower price and or start new projects.
Amid a state of emergency for the entire world, we can all agree things are not going the way we had expected them to this new year. But akin to every challenging hand humanity has been dealt with before this, we will overcome the COVID-19 virus. Everyone must prioritize their health and well-being during this time while we continue to stay informed, connected, and optimistic about preparing for the future that awaits us. As the world economy begins to reopen, the second wave of COVID-19 cases is projected, and businesses will start changing their operational procedures to prioritize safety and protection against the virus.