What Is the Most Pressing Challenge Posed to The Real Estate Market by The Covid-19 Outbreak?
In the past years, investors who have put their money in the property market have received steady returns on their investments. In fact, the risk of sourcing for investment cash from corporate sources such as banks has been significantly low given that the real estate industry has always provided guaranteed high returns on investment. However, since the outbreak of Covid-19, investors in the property industry have been hit by huge losses across the board. Real estate investors and businesses such as floorplansUsketch have been struggling hard to ensure that their employees and clients do not feel the health effects of the coronavirus.
Today, many investors and property developers are having a hard time obtaining building permits not to mention delays and stoppages in constructions as well as lower returns on their existing investments. At the same time, many property owners and other players in the industry have been hit by lower levels of operating income. Property owners across the world are constantly worried how their tenants and clients with property leases will be able to meet their financial obligations. Players in the property market are now constantly thinking about how to offer and apply ‘concessions’ and ‘abatement terms’ to their clients.
Will the Virus Force Existing Behaviours In The Industry to Change?
Players in the real estate industry no matter the extent of their portfolios are being forced to ponder what the effects of the Covid-19 outbreak mean for the industry and what these effects will mean for the currently highly-favoured property designs. All things point to major changes in the current real estate trends. For example, the highly implemented trend of densifying the number of people in commercial spaces as well as open-plan office layouts may change drastically because of the coronavirus.
How Are Leading Property Investment Gurus Coping with The Covid-19 Outbreak?
Though it is hard to predict what the long term effects the virus outbreak portends, the immediate effects on this industry have been wide-ranging and far-reaching. For example, there has been dramatic selling of some types of properties. As it is, both private and public real estate companies are being forced to rethink how their staff and tenants live and operate while at the same time having to make unenviable business trade-offs. For investors in the real estate industry, it is all about finding the perfect way to preserve their capital investment while gaining a competitive-edge.
So how are many real estate investors coping through the effects of the virus?
1. By Earning The Trust, Respect and Loyalty of Their Staff and Clients
Protecting the health and safety of workers and tenants during this period is paramount for many business owners during this period. Leading property investment gurus are being forced to constantly communicate with their customers and clients with a view of identifying their needs and find ways through which they can create a favourable eco-system during this tough period. Achieving this may require investors in this field to communicate to stakeholders as an overall company brand instead of communicating as separate property entities. This behavioural change is likely to become a major trend in coming days.
2. Centralisation of Cash Management
In the past, players in the industry mostly used to make capital investment decision based on the needs of each property in their portfolio. However, given that the duration and serious of the virus is yet to be ascertained, players in the industry are now making financial decisions based on their overall portfolios. Today, real estate players are first considering the impact of financial decisions to the overall company portfolio as a whole before investing capital. For financial prudence, investors are identifying how to efficiently use the resources at hand in such a way that individual properties and the overall company portfolio does not suffer.
3. Making Decisions Based on Existing Conditions on The General Real Estate Industry
Before making decisions such as reducing leases, investors in real estate are now looking at the policies being enacted on the city, state and federal level. Investors are now woke on the fact that they cannot make stand-alone decisions since policy changes at different levels of government may be different.
4. Adoption of Digital Technologies
Though most investors in real estate were already investing in digitising service delivery to their tenants and clients, the fact that the coronavirus has made social distancing a must has accelerated digitisation of services. Property investors are now digitising their services more quickly to not only protect the safety of stakeholders but to also improve the overall experience of using the services on offer.
5. Making Changes to Prime Real Estate Portfolios for Future Growth
At the moment, many players in the property market are starting to undertake changes that will allow their companies to survive the virus and also prosper when this period is over. Property market investors are now making strategic reviews with a view of understanding how the real estate industry may change in the long run. However, unlike the past when investors did strategic reviews through customers surveys and traditional market surveys, investors are looking to sociologists, technologists and psychologists to understand what the full impact of the virus on the real estate industry will be like.