Property Investment Considerations Post Coronavirus

Over the past couple of months, life, as we know it, has changed. We can no longer meet, work, eat shops and socialise like we use to due to Covid-19. The world moving from ‘business as usual’ to office closures, social distancing considerations and work from home mandates have changed the lives of many.

The coronavirus crisis has affected the property investment market in many ways. Short-lets are being cancelled and many people are worried about the future of their assets. Beyond the immediate challenge, the longer the crisis persists, the more likely we will see a change in long-lasting behaviours.

What could happen to the property market post coronavirus?

Behavioural Changes

The Covid-19 experience could permanently change behavioural habits that may affect the demand for hospitality properties and short-term leases. The demand for large commercial office space may decrease over the coming years, as many employees are adapting to working from home. There may be regulations in place to limit the number of employees in an office at one time, which will help reduce the risk of future pandemics.

Consumers are forced to shop online, and this may permanently adjust their buying habits. Prior to the pandemic, many shoppers were already shifting their spending away from high-street stores. In the long-term, this might accelerate even faster, when social distancing is still enforced, and people have become accustomed to shopping online. This will in turn see commercial and high-street property investments decrease.

With universities forced to educate remotely for entire semesters, students are using existing tools to provide high-quality education at a lower cost, and a new type of online-offline education could become widely embraced. This might see more students studying at home and a decrease in the need for student housing.

The depth of breadth of the economic impact post coronavirus is uncertain. However, behavioural changes will lead to a long-lasting effect in property investments. Experienced investors may make immediate action to score the best investments, but they must keep an eye on a future that could be meaningfully different.

Taking the Digital Leap

Prior to Covid-19, the property industry had been moving towards digitalising processes and looking at ways to create digital services for tenants and landlords. Practically overnight, social distancing and non-essential workers were told to stay at home, which has magnified the importance of digitalisation.

With many property agencies investing in digital sales and leasing processes, such as using online viewings and targeted personalised sales, this will allow more buyers to find the right space for them. However, in recent weeks, viewings can be conducted where safe to do so, ensuring that safety guidelines are met.

Although, as more users adopt these digital-first products and services, expectations will be raised and companies that offer a differentiated post-crisis experience will stay ahead of the curve.

Rethinking property investment

The property industry is starting the process of thinking ahead to when the crisis is over. Will large commercial office spaces be as popular now their employees have become accustomed to working from home? Will people currently living in apartments decide they would like more garden space and be looking to move?

Similar to the financial crisis in 2008, some property investors will flourish, whilst others fade. Particularly with the decline in short-term cash flow as well as the uncertainty around the tenant’s ability to pay their rent. In the medium to long term, things will hopefully get back on track but changed behaviours forced upon the industry will have likely altered the way consumers and businesses use and act with properties.

Acting quickly and smartly will help determine the fate of those not only in these challenging times but also as the industry emerges from the current crisis and reinvents itself. 

Rob Bence, chief executive of Property Hub, said that developers are negotiating deals due to the uncertainty, whilst investors who are in a position to continue investing are taking advantage.

On the other hand, some buyers who are going through the process are left feeling unnerved as they are unsure of mortgage availability and lack of conveyancers due to Covid-19. Investing in property post coronavirus will depend on one’s risk appetite. Its highly likely that there will be great opportunities at the market in the short-term, and it’s up to those who take a little risk to get the best deals.

Those who invest in property for the long-term with many years of experience behind them will not let this pandemic differentiate their actions and they will likely to continue to invest. However, those who are new to investing or have been affected by Covid-19 through job losses or financial hardship will more than likely struggle for a while before getting on to the market.

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