The impact of Covid-19 on real estate is more than just placing everyone under enhanced community quarantine (ECQ).
With news of the global crisis taking over the headlines, property investors and homebuyers felt uncertain about their assets being put to risk.
According to a report by Business Mirror, the pandemic shows proof that the local real estate industry remains resilient.
A forecast on real estate shared that:
Contract sales are paused and expected to continue after ECQ
Buyers are looking for good deals and browse online for properties
Schedulings are set and dated after the lockdown
Price adjustments help to sell faster
Rentals have shown to decrease in price due to payment delay requests and discounts.
In this article we enumerated 7 effects of Covid-19 on real estate and its rapid growth:
Majority of the industry will be driven by the growing demand from the BPO sector, both inside and outside of Metro Manila. Real estate developers are proposed to be given permission so they can resume project construction and these include:
Townships in CALABARZON where they plan to develop commercial buildings and sell commercial lots in the business district
Warehouses and distribution centers outside Metro Manila for the booming e-commerce sector
RELEVANCE OF BPO, IT & POGO
The outbreak may have affected a lot of businesses to temporarily close or forced to shut down, but there are industries that are seen to bounce back better than others once the lockdown is over. To add figures, insights by Leechiu Property Consultants show the resilient demand from technology-powered companies, particularly the information technology, business processing management and multinational corporations from China, namely the POGO sector.
3. DEMAND FOR HOUSING
The large unmet demand for housing serves as a large factor why real estate is seen as an ideal long-term investment for Filipinos. With more than 6 million housing units needed to cover demand, real estate companies and developers continue to have a contribution in the economy.
Residential developments that are environmentally conscious are attractive in the market, especially low-density areas that offer house-and-lot type properties with green, open spaces just outside of Metro Manila.
Within the metro, co-living spaces and micro housing are the options available for employees and young professionals near CBDs.
There will be softer demand for condominiums in 2020, but expected to recover by 2021.
4. THE RISE OF REIT
There are forecasts showing real estate investment trusts (REIT) to pick up momentum so it can stabilize the property sector and bring opportunities for smaller investors to enter the market. Especially with current stock values plummeting, the resilience of real estate shows how attractive an investment it can be.
According to another news report by Business World, the plan to establish the first REIT in the Philippines will still push for application this year. Ayala Land, one of the biggest developers in the country, continues to coordinate with the Securities and Exchange Commission (SEC) regarding this.
5. DECLINING RETAIL AND TOURISM
Since the beginning of the region-wide lockdown and ECQ, there have been a lot of limitations when it comes to outdoor activities like shopping and traveling, to only the essentials.
The reduction in foot traffic has been shifted to the digital space, and a lot of bookings have been dropped from the hotel and travel sector.
However, there are some conflicts in the industrial sector since the change in landscape has disrupted the supply chain due to travel restrictions, so ecommerce may be booming but the capacity of logistics providers have reduced by half.
6. LOWER PURCHASING POWER
According to Colliers International, remittances coming from OFWs are expected to drop because of the lockdown in various countries. While rent deferments are offered by some commercial property landlords on a case-to-case basis, there is no relief for non-retail tenants. There is no reduction in expenses and utilities, but source of income and dispensable cash becomes much more limited.
7. THE NEW NORMAL
Despite being under ECQ, there’s no reason for real estate professionals to stop working, especially when equipped with the right tools.
While the usual outdoor activities like “tripping” are still prohibited, it’s important to start focusing on digital marketing and online selling.
Some steps you can take, if you haven’t already:
Register your complete information on Google My Business
Create business pages on popular social media platforms (Facebook, Twitter, Instagram, LinkedIn and YouTube)
Engage in marketing campaigns by creating content, sending out SMS and Email messages
Put up your property listings on major listing websites, as you see fit and productive.
Invest in having your own website for your brand and/or company
Communicating with your leads and clients using a CRM like Prosperna, video chat, instant messaging apps, social media and other relevant platforms.
Stick to your schedule, develop a routine and harness your marketing/selling skills
The impact of Covid-19 on real estate carries both positive and negative effects, but research has made it certain that when things go back to normal, high demand and low interest rates will benefit the property market.
People with extra cash-on-hand may use their money to purchase real estate now, compared to when the economy recovers, since they can negotiate for discounts and better selection of properties.
Real estate professionals and companies can place their focus on digital marketing and brand-building remotely, with the help of technology.
I, Mitch Razote, will continue to deliver the latest information when it comes to real estate for the benefit of both property investors and industry professionals. If you have any questions you would like to know about real estate, feel free to read my other articles or contact me so we can have a meaningful conversation.