For the past months, countries have been facing economic problems and difficulties in the health sector mainly because of the COVID-19 pandemic. The real estate sector seems to be the most affected; investors are no longer developing new properties. Shopping malls have been vacated due to loss of business, and people have stopped selling their properties since getting a buyer is a major struggle. This sector employs more than 20% of the labor force in a country, and with the pandemic, some of these people have ended up unemployed.
However, some sectors seem to have improved rapidly like the e-commerce sector. Most people prefer to sell their goods via online platforms where they do not need to rent shops for operations. In countries that are more affected, retailers are being forced to send their workers home and cease operations. Below is the impact of COVID-19 on the real estate sector.
Rent Relief
A decline in income means that business owners, home buyers, and tenants are having difficulties in paying their monthly housing expenses. Many businesses are now requesting their real estate brokers to negotiate for lower rent and prices so that they can at least keep their businesses afloat. In some countries, landlords have reduced rent payment by at least 50%, and some retailers have already been granted relief measures like a rental rebate.
Effects on Residential Real Estate
Many think that the effect of COVID-19 should not extend to residential real estate. However, some homeowners are concerned because people are holding off when it comes to buying houses. Homebuyers are not easily convinced over fears of uncertainty, which is anticipated whenever something unusual happens in the market.
However, real estate agents believe that this is still a good time for them to list their properties on the market because some people continue to be interested in buying houses. If you want to buy or sell your home using reliable agents, just get more information on HomeFlippers website.
Reduction of Construction Activities by Developers
Countries with the highest number of affected people have reduced construction mainly because there has been a negative impact on the supply chain since most developers’ sources of materials are from countries such as China. There has been a failure in project finance as lenders are declining to finance construction projects owing to the current uncertainty of the economy.
Closure of Many Business Sectors
Businesses such as hotels and malls have been shut down largely because of their heavy reliance on tourism, meetings, and conferencing. Most countries have implemented travel restrictions, which have mostly affected international tourist arrivals, hence leading to the closure of major hotels, restaurants, and malls.
Conclusion
The pandemic seems to have affected every sector in a country. Economic activity this year has declined drastically compared to other years. With no cure yet, real estate investors and home buyers have nothing else to do except to just wait and see what comes of the pandemic and the real estate sector. For developers, it is safest if they wait first before continuing with their investment projects.
