Property markets around the world are feeling the effects of the Coronavirus crisis, and there is so much we don’t even know yet.
As I write this, we’re in the ninth week of the Coronavirus lockdown in the UK. Infection levels are gradually starting to go down, and restrictions are beginning to ease. Most of Europe, Asia and North America are also lifting some limits, although Central and South America are still suffering badly. It’s time now to look forward and assess the situation and opportunities for the forthcoming months.
In this article, we’ll look at what we currently know, as well as try to make some predictions for the future.
Uncertainty
Overall, we believe the global property market will take a big hit in the aftermath of COVID-19. The main reason for this is uncertainty – business hates uncertainty.
In the UK, the market has weathered storms of uncertainty around Brexit and then the hung parliament. Now it’s the Coronavirus that will make buyers, sellers and investors reluctant to act.
The question is, how long it will take to recover, and what the eventual recovery will entail. We hope the property industry, which was growing from the start of the year, can bounce back quickly.
Economy
Most economists and finance ministers believe a recession is inevitable once the COVID-19 crisis is over. Countries including the UK and US have already taken measures to try to safeguard their economies, such as reducing interest rates and bailing out struggling firms.
In the property industry, there will already be companies that are downsizing and reconsidering their investments. There will also be companies that are on the brink of insolvency. The virus has halted construction, disrupted the supply chain for materials and slowed demand.
Commercial property
The situation in the commercial property industry is just as worrying. Many retail tenants are struggling to pay rents. Landlords do not want to be left with empty units, but they still have to collect their money. Sadly, it’s expected that many shops will not be able to reopen after the lockdown as many look to invest more heavily in their online presence.
The situation with offices is different. Many companies will have found during the crisis that they don’t actually need an office, and that they can function quite happily with everyone working remotely. When the time comes for them to renegotiate their tenancy for their office, they might decide not to bother. There will certainly be opportunities as the market seeks more flexible opportunities for office working; this will no doubt lead to winners and some losers.
Residential property
At the time of writing, the property market is beginning to open up again in the UK. However, things are very slow. Viewing a house while maintaining social distancing is difficult, and many people who were previously selling do not want strangers coming into their home.
The uncertainty in the economy will make buyers reluctant to commit. Many people are concerned about redundancy or reduced revenues. In these conditions, the demand for homes falls, affecting house prices. Many investors who are in a fortunate enough position to capitalise on this, may view this as a significant opportunity.
The global picture
Across the world, it is a similar story, although there are some areas where industry observers are optimistic. Before the crisis, the property markets in Paris and Lisbon were booming, because of finance and Chinese investment, respectively. These cities will be in the prime position to bounce back quickly.
On the other hand, countries and cities that rely on tourism will be feeling the pinch.
Find out more
All in all, it’s a difficult time for the global property industry. The signs aren’t great, and we don’t know what we don’t know. However, there is another view that having been deprived of opportunities for two or three months, consumers will want to spend as much as they can, as soon as they can. Businesses will be looking to invest and grow, taking advantage of opportunities where they can. Governments around the world seem to want to facilitate a bounce back. Let’s hope they can.
If you’re in the property industry and looking to build a relationship with a committed, forward-looking recruitment agency, talk to the Joshua Robert team on 0121 582 0877, or visit our site today.