For the rest of 2020 and beyond, what key shifts in the real estate market can we expect?
As the world emerges from the coronavirus lockdown, people are beginning their transitions back to lives outside the four walls of their home. Businesses are grappling with new health and safety measures while working on getting things up and running again. In the real estate world, real estate firms, developers, and investors will have to rethink existing plans and strategies to adapt to a changed world.
The coronavirus pandemic and ensuing economic downturn has changed the real estate landscape on all fronts, with both short-term and long-term alterations. Developers are facing delays on construction work, commercial property owners are facing emptier shopping malls and offices, and tenants struggling or unwilling to pay rent.
With many restrictions on social activities still in place, residential property owners looking to sell are faced with the challenge of selling without having in-person house viewings. Given the multitude of changes to the real estate market, what are the key shifts to note?
Industrial Properties will rise in demand
Over the last few months, consumers have been forced to do a bulk of their shopping online, on eCommerce platforms such as Amazon, Redmart, and Lazada. As a result, retailers saw a sudden significant increase for online goods, especially across the fast moving consumer goods (FMCG) and pharmaceutical products niches. These surges in demand also refer to consumers occasionally having bouts of mass-buying of products for fear of these products going out of stock.
Stores were faced with the challenge of enlarging their inventories in order to keep up with this surge in consumer demand, providing deliveries within a fixed time period for a larger number of people. More storage space is needed to prepare for potential new waves of massive spikes in demand as countries alternate between lockdown and no-lockdown phases in COVID-19 containment efforts.
Furthermore, big retailers are not the only ones having this need for more industrial warehouse storage space. Independent, small, direct-to-consumer businesses have also been forced to shift to the web, and in some cases perhaps even shifting away from brick and mortar stores. This would in turn lead to them seeking industrial space too. Investors looking to target small businesses could explore the idea of leasing smaller projects, as these small businesses would not require that much of a vast storage space.
Enhancing Tenant Experience in the Post-covid Office
The coronavirus lockdown has resulted in what was probably the world’s biggest work-from-home experiment. Tecommunications softwares like Zoom and messaging platforms like Slack have made it possible for companies to continue working and collaborating. As we find ourselves a few months into the work-from-home setup, people have gotten used to not being in an office space, and some are evaluating if there even is a need to go back to the old norms of office life pre-virus.
How can investors maintain the competitiveness and lure of their office properties?
The offices of tomorrow must focus more on creating a seamless tenant experience. Landlords can differentiate themselves from the rest through demonstrating that their office spaces provide more than a functional purpose with just the bare necessities of desks and seats.
In other words, owners of these buildings need to retrofit their building for wellness. New needs related to protecting one’s health will be high in tenants’ list of priority. With the coronavirus threat looming, demonstrating that your building prioritises hygiene and health would go a long way in reassuring people working inside that their safety is of great importance.
Companies making the shift back to non-remote work will be on the lookout for office spaces that do not put them at risk of jeopardising their health, and may move out of older offices in favour of newer, high-tech ones with health-tech features.
Upgrading one’s existing properties with more building automation features such as touchless light switches, taps, door locks, and lift buttons will put at ease the minds of tenants fearful of catching the contagious COVID-19 virus. Upgrading air ventilation features to ensure good air quality will also help improve the health of office workers. These improvements would help to ensure your property maintains its competitiveness in a stage where competition for tenants is higher than ever.
Embrace the digitizing of the real estate industry
Apart from adopting proptech in the commercial building sector, investors owning private residential property will similarly have to follow suit in future-proofing their houses, fitting it with health-tech innovations to increase the value of properties, and to have an edge over other regular houses.
In the house-viewing stage, with the crisis affecting potential tenants’ ability to view houses in person – whether that’s due to official government restrictions or self-imposed restrictions out of precaution, asset owners will need to explore using technology to conduct virtual home tours.