Covid-19 came just when the real estate sector was beginning picking up after a 2-year slump. It has brought with it a change in a lot of dynamics of how people conduct businesses. The coronavirus has brought with it many changes, and every other day could alter our outlook. Many businesses are now transacting online as people turn to the internet for their purchases.
What does Covid-19 mean for the real estate sector in Kenya:
1. Limited site visits mean fewer properties are sold.
Real estate is the last business that you can wholly transact online. Somebody must be on the ground to visit the site. With lockdowns, limited movement, and safety concerns, it has become difficult for buyers and agents/sellers to close on property sales. Sellers and buyers do not want to contract the virus, understandably. You need to take strict safety measures as you do your site visits.
In some cases, you may have complete trust between the seller and buyer, in which case you might want to start the process online, make a down payment to secure your property, and agree to complete payment after viewing the property, once the corona crisis has eased, and lockdowns lifted. Make use of google maps, 360 degrees footage and drones to for property viewing.
2. Building and Construction will take longer
With, again, restricted movement, you find workers may have a problem moving from one location to another. There’s also the issue of moving building materials into or out of locked-down areas. Construction suffers when construction materials cannot be delivered in time.
For construction workers on site, sanitation must be provided, including sanitizers, masks, and washing soap. Workers should be limited to the minimum number required for the specific tasks, and physical interaction among them should also be strictly prohibited.
3. General economic slump
This is both on a national and personal level. Many have lost their incomes, as their jobs face an uncertain future. Some businesses have totally come to a halt, while others are operating on a reduced income capacity. Others may operate normally, and paying their employees as usual, but those who have money are also not spending, they are withholding money out of fear and uncertainty of the future. Construction and mortgage credit may also be harder to access at this period, making real estate development more difficult.
4. Rental Income
Because of the general economic downtime, many tenants have asked for leniency in making their rental payments. This may have the ripple effect of slowing down of investing in rental property. Commercial properties will also lose out heavily, as many businesses close their offices and operate their business from home. Since some use rental income to repay loans used in purchasing or construction of those homes, this spells another doom for the mortgage industry.
Tourism inactivity due to Covid 19 has affected vacation rental income negatively.
5. Effects property prices
Property pricing has remained the same because real estate remains an attractive investment. However, the pricing may remain steady for some time, rather than increase. Property is still considered a stable investment even during the COVID-19 period.
Rental prices, however, may go down, especially for commercial properties as businesses close or reduce capacity, prompting landlords to lower rental payment.
“Every crisis presents opportunities”
With uncertainty in the stock market, investors will probably turn to real estate. Decent low-income housing demand is also likely to go higher, due to the long term negative effects of Corona Virus. Many families will be forced to downgrade their lifestyles.
What other opportunities can you spot in the real estate industry as a result of the covid 19 crisis?
Remain positive, stay safe, and strategize well.