COVID War encounter will have long lasting effect on how people communicate, live, and work even when the situation will be under control. This COVID-19 crisis will certainly cause a lot of change to how human operates and many future designs for living. The situation has forced immediate changes such as people are now afraid of normal face to face meetings and other socialized ways as they used to. Work-from-home (WFH) becomes mandated, virtual online meeting is required, and going out to eat at the restaurants becomes insecure. Beyond these immediate changes, as the longer the crisis continues, people’s behaviors and lifestyles are more likely to change and the way the businesses being conducted will be transformed. One of the major components for people’s living is real estate industry and this COVID-19 crisis has affected its value chain from tenants’ ability to make lease payments, landlords’ struggling to sell available space and close deals to the industry future designs (standard HVAC, square footage per person, amount of enclose space, and numbers of units) all developers have to consider.
It is obvious that the COVID-19 crisis has done significant damages to real estate industry especially hospitality properties including hotels, restaurants, shopping malls, pubs and bars. Many hotels are forced to shut down due to the deficit while keeping their businesses going with all expenses but not much of the revenue generated. As for restaurants and shopping malls, with people have followed social distancing practices, their businesses have gone downward rapidly just over couple of weeks, the restaurants cannot get enough customers, then the restaurants’ owners are in need to negotiate with landlords to reduce rental costs or even to ask for payments to be postponed. Consequently, the landlords need to make adjustment to their customers’ requests, at the same time have to work with banks for financial helps. As for temporary vacation businesses such as AirBnB, their reservations were promptly cancelled and restricted by many local city councils worried that their limited healthcare infrastructure and off-season supply chains would be overwhelmed by visitors. Compared to other years, the short-term rentals reservations for this 2020 summer travel are reduced by at least 75%.
With the quarantine process being implemented and people works from home, selling properties are in difficulty situation due to buyers are afraid of having physical contact therefore traveling to see the properties are very limited, inspectors won’t inspect, and appraisers cannot appraise. In some cases that the buying process has been started before the COVID-19 crisis and the physical work was done, then the rest can be continued virtually such as via Zoom, Google Meet, then using couriers and drop-off or drive-through become preferable.
As the lasting changes have yet to come, uncertainty becomes the real estate’ greatest future risk. Nobody knows how persistent the COVID-19 crisis will be, how long the economy will be stalled, and how the continued impact of social distancing concern will change the way we live, work, and interact with one another. One thing we all can be certain of is the sooner ones can adjust and figure out their business transformation, the more advantage and faster recovery they will gain.