The effects of covid-19 will be long lasting, not only on the healthcare industry but on many different industries and sectors globally. It is not hard to see evidence of this. Even as covid-19 cases have come down in countries, many are still using screen separations for protection and a host of new online services available to consumers, encouraging them to stay at home.
The pandemic has changed the world. The increasing number of cases globally has left national economies and businesses analysing costs as well as letting go of large numbers of staff, creating an increase in unemployment figures as presented by the graph below. Although there has been success in developing vaccines, there is still much uncertainty and wonder of how and what recovery from the pandemic will look like and, more importantly, how long will it take.
The pandemic has altered the way we work in a big way. Work From Home (WFH) has been strongly advised during the pandemic to help reduce the spread of the virus. However, as the pandemic has prolonged, many businesses and organisations are beginning to see the effect of working from home. Not only has WFH made employees more productive, using energy that otherwise would have been used for commuting into work, but WFH has also helped businesses save money without the need for renting or purchasing office spaces. This naturally has had an impact on real estate, but how?
Impact of Covid-19 on real estate
As mentioned earlier, WFH is proving to be beneficial to a wide range of companies. So much so, it was mentioned in half of S&P 1500 companies in their second-quarter earnings of 2020. More than half of employees are willing to encourage working from home in the UK even after the pandemic is over, creating pros and cons for real estate. Here’s a look at some trends covid-19 has brought to real estate.
Owning a property
The pandemic has helped to change the way many buyers think about homeownership. The thought of renting has been under the microscope over the course of the pandemic and is largely down to the fact that either buyers are unable to afford them or renters are becoming picky. Owning a home has gained new importance, especially as the UK government has introduced new laws and holidays making it easier for first time buyers.
Lockdown helped reinforce, to many, the importance of owning their own homes, especially as that was the only place people could be or even feel safe. Prior to the pandemic, many were conformable living in rented accommodations or even shared accommodations, but now that WFH has become a big part of life, it has shifted and altered the thought process of many. This is great news for personal real estate, creating a boom in the industry.
Like many industries over the pandemic, the real estate sector has been forced to react and adapt, creating digital solutions, allowing their work to continue. The pandemic has shown how digitisation and technology can help replace human activity, cutting costs and increasing time across a range of industries. The real estate market has slowly adjusted over the year to include digitisation on their sites in the form of online viewings, which could be the future.
There is also a range of innovations in technology such as AR, VR, and AI, which could further push this sector, increase user experiences, and create more opportunities. Smart glasses may provide massive potential for the digital shift real estate has undergone, making virtual property viewing possible. It is only a matter of time when smart glasses’ adoption reaches consumer levels, and we too, see them become widely adopted like smartphones.
Developing WFH friendly realty
As work from home becomes a significant part of everyone’s lives, real estate developers are looking to the future and building new real estate to factor in WFH to help capitalise on this sector’s shift. New houses will incorporate specially designed WFH spaces. There is also interest in turning commercial spaces into new homes to feed the hungry house market, which is currently suffering from a lack of homes to feed the appetite of the number of buyers.
Commercial property is set to undergo massive transformations that will take them far beyond previous criteria based on location and value proposition. The industry is turning their heads to look at finer details offering customer experiences and workspaces that can cater to the restrictions of the pandemic, which means, instead of placing as many desks as possible, new office space will let employees social distance safely for those businesses who wish to go back into offices.
Location means nothing now
Many buyers were focused on buying homes close to their workplaces or transport hubs to help bring down commuting time. However, now that WFH has presented a loose case for their argument, many buyers are now looking into buying homes outside of cities and in a more urban area as they would be more affordable. Houses generally outside of popular places are more affordable. The shift into WFH may help to increase the prices of properties that were not so popular before the pandemic.
Due to covid-19, evidently, there is a change in the way people are and will think. There will be an increase in the number of people buying homes. However, external factors such as job insecurity and reduced salaries, or even a decrease in jobs as digitisation has reduced human interaction could present some significant issues as we advance.
On a more positive note, the real estate sector has been, like many others, quick to respond to changes, creating new opportunities for online viewings and adapting in the best way possible. The pandemic has brought a groundbreaking monumental shift with it as many realise investment preferences, which will inevitably continue, outliving the pandemic.