Real estate is said to be one of the most robust and booming industries in the country. Before the COVID-19 or Coronavirus-19 pandemic hit and caught everybody off-guard, the industry is showing different signs of growth. Different real estate companies were listed and making strides on the stock exchange.
On the other hand, business was said to be at an all-time high with agencies generating record income by accommodating many locals and tourists looking for houses and hotels to stay in during their trips.
However, the global health crisis has put the real estate industry to an abrupt halt. Government regulations such as travel bans and stay-at-home orders badly hurt different players doing real estate for they mainly strived on face-to-face interactions in the past. It was also among the key industries that took a financial beating and are continuing to feel its negative effects as the public health crisis drags on.
How exactly has real estate can weather this crisis? Learn more about how the industry compares before and during the lockdown.
Real Estate Before And After Lockdown
Restriction of human movements from one point to another has generally characterized this lockdown period. The government has released such orders in a bid to contain the spread of the virus resulting in a dramatic impact on real estate.
Here are some of the changes noted after the lockdown:
1. Construction Of New Units
Availability of new units is one essential factor that usually keeps real estate going. Before the lockdown, sellers were able to construct new housing and commercial units that were later put up for sale. This was made possible due to the unrestricted movement of people and materials from different localities. Workers came from abroad and brought in with them their expertise needed to fuel the industry’s continued growth.
However, after the lockdown, movements of people were limited across local and international borders. Regulations on social distancing were also enforced which hindered how workers could go about in their daily construction operations. This, therefore, decreased the available units for sale and subsequently the number of businesses in real estate.
2. Stock Market Value
Real estate agencies usually list themselves on the stock market to stand a chance of an increased valuation. This was possible before the pandemic due to an upward trajectory on demand for housing units that led to purchases and lease agreements by people and companies. Regular digital marketing had an audience and hyped confidence in investors.
After the lockdown and regulations such as working at home, the demand for commercial and housing units is said to have significantly dropped. With a low leasing market, the stock market and the share prices have also reduced as a result.
3. Site Visits
Site visits are fundamental during the purchase of an estate. Buyers usually take a tour of the listed home before making an offer to purchase the property. This was possible before the pandemic as no one was afraid of contracting the virus and there were no restrictions on public gatherings.
Yet during the lockdown, as the number of infections continued to rise, most homeowners have become more conscious of who they let inside their homes as a result. In addition, it’s believed that most sellers have become more mindful of what these visitors touch, and where they come from. Such fears and worries have been a setback to the industry that is said to have dramatically complicated the process of home selling.
4. Revenues Generated
Commercial units such as hotels, shops, and restaurants benefitted from rentals paid by the business owners leasing the properties. Proprietors largely depended on the turnaround of visitors to generate income to pay up monthly rent and other business expenses.
However, the lockdown has gravely impaired many businesses and their operations. Many have experienced income disruptions as government mandates prohibited people from going outside their homes and do mass gatherings. Due to a reduced customer base, owners’ income is also greatly reduced resulting in most missing out on paying rent.
To keep hold of the leased units, business owners end up taking a financial gamble and accumulate debts to finance rent obligations. The lockdown, therefore, has severely affected the revenue structure in real estate.
5. Consumer Behavior
The lockdown has placed a big test on perceived consumer behavior, which in turn might affect the future of real estate. Consumers then were used to working in office spaces, eating in hotels, and even setting up brick and mortar retail shops. However, local authority restrictions forcing people to stay at home have pushed consumer habits to change.
Most people are now believed to have started cooking their own meals, working from home, and spending the nights all by themselves. This sudden and drastic development caused by the lockdown may negatively affect income in real estate in the future. Businesses will lose clients as people will see no need to work or eat outside their homes.
6. Market Scope
An uncertain market scope is one of the significant impacts of the lockdowns. Development companies have been facing a changing market scope due to restrictions by the government and loss of consumer confidence. For companies that depend on loans to spur market activity, the lockdown could be a course of worry for the company and the lender.
There’s no guarantee when the lockdown will be over or how long consumers will take to get back to their feet and lease or buy the houses available in the market. Unlike before the pandemic, companies can’t afford to invest all their resources as it’s difficult to convince new clients to engage in purchases during the lockdown.
How Real Estate Can Recover
It’s evident that the real estate industry took a large chunk of the negative impacts brought upon by the lockdown. The main categories affected are the sellers and the agents. Yet stakeholders should ensure normalcy resumes the soonest to usher in an era of recovery.
Some of the measures that can be taken to help in rebuilding the industry include the following:
- Virtual Home Tours
Due to the reluctance of homeowners to host visitors, virtual home tours could be a better and effective way to show potential buyers a property up for sale. Homeowners and agents could prerecord the homes, share them with buyers and have online sessions to discuss the home. This will enable everyone to observe the social distance regulations set to curb the virus while discussing a sale.
- Keep Clients Updated
Real estate agents should take advantage of clients staying at home and reach out to them with updates on different developments regarding real estate. Constant communication with clientele to reassure them everything will be okay is vital in winning back their confidence. This will help level up your business once the pandemic is over.
- Level Up Marketing
Consistency is the key in marketing as you can’t afford to lose clients. During the lockdown, marketing is a must, and you’ve to find ways to keep your old clients and make new ones. You should take advantage of people spending more time on social media to reach them. You should also set digital advertising that will help reach a bigger audience anytime.
Even with the lockdown affecting real estate, that’s not the end of the industry. There’s still a chance for it to make a comeback and be as good as it was before COVID-19 hit. Every stakeholder should work to ensure its success. However, when bringing real estate back to its feet, everyone must stay safe. Following the regulations and laws will help contain the virus and bring back normalcy for everybody.
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