As a panel member on a webinar during lockdown 2020, I was asked how global real estate will change after Coronavirus. The webinar was staged to help developers, estate agents and architects adapt.
The webinar was hosted in Mumbai, so it leans towards India, the Middle East and Asia, but the points I make are for a global audience.
For the furloughed or desperate amongst us there’s a captioned 17-minute video of my deliberations above. If you’ve got better things to do than watch me rabbiting on, here is a summary of my key points:
- What we don’t know
- How deep the economic impact will be?
- Recession or Depression? 18 months or several years?
- Effect on 18-year Property Cycle?
- We have just passed mid-way in the 18-year Property Cycle and global real estate should be booming
- UK just out of Brexit was starting to see stronger sales. But now?…
- What we do know
- No mass-produced vaccine likely until 2021 – Covid-19 is with us for a while
- Normal work practices (proximity to colleagues/commuting) challenged
- Big hit to every economy in the world
- How will Property Location be Affected?
- Manufacturing
- Shift towards nationalised rather than international manufacturing. Particularly essential manufacturing such as PPE
- Manufacturing > makes Jobs > that Need People > Who need Housing
- Housing demand will increase where new manufacturing companies spring up
- Settlements
- For 18 – 24 year olds city life will still appeal, but
- 30+ age group with family expect Urban to Rural; City to Town Migration
- Homes
- A shift from Work Office to Home Office. To avoid the commute. To preserve social distancing. Because we can! Was trending anyway but accelerated by Covid-19
- A shift from City 1st home & Rural 2nd home to Rural 1st home & City pied-à-terre (1-beds & studios)
- Manufacturing
- How will People’s Needs Change?
- Home life
- Working from home issues: space, noise, privacy, equipment, broadband etc.
- Only 25% of homeworkers are working in a dedicated home office. Another 25% said their home workspace was inappropriate
- Upsides:
- Family life and work/life rebalancing
- Deeper respect of nature, a simpler life and a cleaner way of living
- People’s attitude to food and exercise will improve
- Home life
- How will Homes Change?
- Decreased demand for high rise apartments
- Increased demand for low-rise apartments, terraced, semi-detached and detached (“single-family”) houses
- Home offices. Dual key?
- Home gyms, exercise facilities
- Gardens and access to outdoor playgrounds, parks increasingly important
- Strengthening desire for cleaner, more efficient, zero-carbon homes
- All this means homes will need more space and better specifications
- What will be the effect on Pricing?
- Upside
- Low cost mortgages. Bank of England base rate is currently 0.1%
- Downside
- Unemployment/reduced earnings will affect consumer confidence (1 in 7 households in the UK are currently in need of financial support)
- Potential Outcomes
- Price Drop (Knight Frank predicting 2%, Savills 5-10%)
- Shift from Sales to Rentals. Build-to-rent opportunities
- Offsite Modular and Panelised Construction trend will accelerate. This may help:
- Bring list price and running costs down
- Move towards zero carbon homes
- Increase in demand for Starter/Affordable homes
- Possible that City office blocks will be re-purposed.converted (to e.g. low-rise affordable apartments?)
- Upside
- What will be the effect on Pace of Sales?
- Significant unemployment in the short term, concerns about job security and compromised administration processes will all reduce the number of property transactions
- What will be the effect on how properties are Promoted?
- Social distancing well into 2021: effect on construction pace, mortgage valuations, viewing visits and sales processing
- Viewing visits will push further down the sales funnel. Shorter consumer short lists – so to speak! Increase in virtual/3-D viewings at top of funnel
- Greater use of personalised video throughout sales process
- Biggest agents, best locations and highest value proposition properties will prevail
