COVID-19 has had a huge impact, to say the least on all the functional industries and the real estate market is not one to be unaffected by it. The world plunged into lockdown owing to the coronavirus pandemic in March 2020, meaning that people have to stay at home as per the orders of their local jurisdiction. Social distancing, something that helps curb the spread of the deadly virus, gained precedence as streets became empty, malls and shopping arenas got shut, restaurants, bars, and recreational centers were closed.

Both commercial and residential real estate along with mortgage markets happened to bear the brunt from the lack of sale and purchases in the pandemic period. According to a survey by Real Estate Bees, the most negatively affected businesses in the industry were real estate brokerages with real estate coaches seeing the lowest negative impact.

As markets started to stabilize towards the latter part of 2020, the real estate industry came back on its feet but not before coming to terms with some ongoing challenges caused due to the pandemic.

Health and Safety

With millions of lives lost in the world, the pandemic proved that one’s health is of paramount importance. The real estate world had to revamp and upgrade its health and safety policy to keep the business operations without having to risk the wellbeing of its agents, clients, and building contractors. The day-to-day activities of real estate professionals involve meeting a lot of people and that had to be catered to by ensuring proper social distancing, sanitization, and masking measures while showcasing properties to prospective clients.  

Economic Revival

With the global shutdown, markets generally the world over showed signs of a slowdown. Sectors that were massively hit were leisure, hospitality, travel, and retail as they involve the direct movement of people. The financial crunch ensured that millions were also put out of jobs the world over in many industries. As job insecurity rose, people refrained from lavish spending in a bid to support long-lasting liquidity.

Widespread capital markets have seen volatility resulting in a sudden fall in debt and equity capital liquidity. This made pricing debt a huge challenge for the developers. Governments in many nations announced stimulus packages to put their economy back on track. That gave the economy a boost but there was an increase in late payments and loan defaults. The pandemic also saw Mortgage REITs taking a hit. One of the economic challenges has been to gauge how much public debt can influence logistics infrastructure, public transformation, and demand for commercial real estate amid the ongoing health crisis.

Dependence on technology

This has been one of the major challenges for the real estate professionals since tons of paperwork and property listing had to go online in a digitized format so that people can check them out from the comfort of their homes. Businesses were forced to take their business operations online, set up web portals, and depend on providing wholesome knowledge via videos, images, and live streams instead of on-site physical staging. Now, creating a strong online presence is one of the chief targets for agencies to achieve in a bid to outperform competitors and woo clients. This led to a rise in real estate online platforms, much like Precondo, which provide accurate information helping you make an informed choice for your next real estate investment.

Demand for commercial space

The rise of online sales became an eye-opener for many businesses. Many companies were forced to re-evaluate their physical shops and storefronts which saw diminishing customer footfalls. Plus, social distancing meant that people worked remotely from home and employers realized that it is a workable long-term solution. This may eventually lead to waning demand for commercial spaces for offices. Commercial and office spaces, whenever in need, will be bigger in size than previously demanded so that employees can be seated in a freer spread-out manner.   

Movement of people

One of the biggest challenges in front of the real estate sector is the limited mobility of people. People moving from one city to another, who need to know how to move to a new state, or who are migrating to a different country for better work-life balance usually result in setting up new homes and accommodations in the destination country. Markets that are driven by the need for hospitality and residential properties will be affected by the behavioral changes forced by COVID-19 and reduced migration.

Utilization of space

The effects of coronavirus are set to have a lasting impact on how a house or a residential space will be built and designed. Safety of constructed properties will take precedence more so now than ever before. Urban planning will see a major change since house affordability, social and healthcare services, job opportunities, sports, and recreational facilities will be in demand near homes. Be it vertical transit, building/house entry, and quality of indoor air, and transmission of air particles will be examined thoroughly by clients before making the right move. The push for working from home and study from home can also mean that the need for bigger separate houses will rise and the real estate professionals will have to cater to these intricacies while being sensitive to the need of homebuyers.     

Dealing with unfortunate evictions

What the pandemic brought to light in the past year is the widespread insecurity in the working middle class regarding long-lasting jobs or a stable residence. Mega joblessness has forced state authorities to mandate regulations pertaining to evictions due to unpaid rents. This caused a major test to law firms dealing with the plaintiffs who underwent the ordeal. “The major challenge was when the application for an eviction order may be brought before the courts, which are now able to hear cases and grant eviction orders even if the plaintiffs aren’t prepared emotionally and financially to appear in courts,” says Glainne White of Schmidt & Clark, LLP. Therefore it now becomes crucial to study all the legal property documents if you’re a prospective buyer and present all the rules and regulations of the purchase if you’re the RE agency so as to avoid any possible legal hassle if the situation arises. “Purchase agreement, Real Estate Assignment Contract, Lease Agreement, and Power of Attorney. These are the basic documents that are always used by beginners and experienced investors alike,” Glainne adds, listing out the necessary paperwork both parties must study before putting pen to paper.

(6 Challenges Faced By the Real Estate Industry during the Pandemic Image Source: Pixabay)