Real estate is a massive market that contains multiple subsections such as residential real estate and commercial real estate. With the current pandemic, many sectors of our economy have been left reeling. Airlines have lost thousands of dollars, restaurants have found themselves under capacity by law, hotels are empty, and many more industries have been shaken by COVID-19. But what about the real estate industry? Today, we’ll take a look at the current state of the real estate industry around the world, as well as a few key trends to watch out for.
Real estate prices have reached lows we haven’t seen in years in some cities. For example, in New York City, prime commercial real estate on Madison Avenue is selling for decade-low prices. In the second quarter of 2019, the average ground-floor asking rent was 960 USD. In the second quarter of 2020, that number has dropped to 822 USD. Furthermore, high-end retailers around the world in major cities are choosing to close their doors instead of renewing their leases in these high priced areas. The pandemic may have sparked this choice, but its results will last long after the world opens back up.
One of the major challenges facing the real estate industry is having to quickly pivot to account for the pandemic and the restrictions it has created. Changes in the behaviors and capabilities of employees pose a particular issue, as does the buying and selling of real estate that tends to contain large amounts of people with high density, such as malls, lodging, hospitals and healthcare facilities, and student housing. Real estate leaders are expected to focus on cash management, efficiency, and providing a more distinctive customer experience to combat these challenges.
In terms of residential real estate, the demand for homes is very high. It appears as though the pandemic has, for some, increased the urge to purchase a home, with many homes on the market receiving several bids. Another trend in the residential real estate market is people attempting to buy and sell homes and property as quickly as possible.
It is clear that the pandemic has left no market untouched when it comes to changes in the way we operate. Real estate, however, seems to be ready to quickly adapt to these new changes, and on the residential end, it may even be thriving throughout this time of uncertainty. Time will reveal the lasting impacts, positive or negative, that this pandemic has on the real estate market.