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The Trends Influencing the Post-Covid Real Estate Market

iStock 177735411 - Global Banking | Finance

COVID has impacted every aspect of our lives – from where we work to the money we have in our bank accounts. When we look at real estate trends for the coming year, we have to do so within the context of a post-COVID society. For almost two years, businesses have repeatedly opened and closed their doors, while consumers have grappled with supply chain issues, raising utility bills, and job uncertainty.

The economy is bouncing back quicker than expected through it all, including the real estate industry. Real estate and property management trends suggest that while the industry has adapted to the pandemic, some aspects may be changed forever.

Could low-interest rates, record-high inflation, and record bonuses lead to a real estate boom? It’s possible. Will commercial properties ever regain their feet in the era of remote working? That’s uncertain. If COVID has taught us anything, it’s to expect the unexpected – and to be optimistic – within the real estate market.

The impact of COVID on the residential market

The irony of the COVID pandemic is that it appears to have left the residential market relatively untouched. Multi-family properties are still experiencing record demand, while rents have returned to peak levels. However, it has turned a new focus on the housing crisis.

Although the housing market is still competitive, there is the question of ensuring that supply meets demand. Forbes reports that the housing supply dropped 53% in 2020 because of supply chain issues and operation problems caused by COVID. For the residential real estate market to remain optimistic, it must address reduced supply and the rising cost of manufacturing, particularly lumber.

Yongmin Zhu CEO STM 01 - Global Banking | Finance

Yongmin Zhu, the CEO of Sea to Sky Management

Emerging trends within real estate for 2022

Part of the trends within the property management and real estate industries have come from how companies have addressed the challenges brought on by COVID.

Sea to Sky Management’s CEO, Yongmin Zhu, says that they’ve adapted to the challenges of COVID by using “the power of technology to help us do business”. Even amid uncertainty, real estate companies aren’t afraid to take a risk with new technology. Yongmin Zhu adds, “we’re trying something new for our service…this is a great time for us to seek some improvements because the challenges we face force us to learn something new”. 

One property trend we’re seeing for 2022 is that niche real estate sectors – such as data centres and cold storage – are attracting increased investment as they become increasingly mainstream. The resilience of the real estate market, combined with low-interest rates, and foreign investment, means that competition remains fierce for multi-family and industrial niches.

A deep real estate trend is the investment thesis of property assets that support our society’s digital, societal, and physical infrastructure. This goes hand-in-hand with the growing focus on environmental, social, and governance (ESG) considerations amongst investors.

The commercial real estate market post-covid

It’s difficult to paint a complete picture of COVID’s impact on the commercial real estate market. With remote working becoming the norm overnight, rental income within the industry sharply fell as businesses cut costs by working from home or choosing smaller working spaces for hybrid offices.

As working regulations change as we learn to live with the pandemic, employees are once again returning to the office. It may take another financial year or more to accurately assess the impact of COVID on commercial real estate. While commercial real estate is likely to recover, it will also seek to adapt to the growing demand for more remote and flexible working.

How real estate companies can reduce uncertainty for investors

Real estate companies across the industry are trying to soothe the concerns of investors by taking a hands-on approach to working with their partners. Yongmin Zhu points to his company’s commitment to accurate client assessments, minimizing risks to yield “predictably good returns”. 

His company reduces uncertainty for investors by ensuring that everyone is on the same page and aware of the impact of every decision, whether they’re choosing a less risky investment with lower returns or better returns with more uncertainty. 

2022 may prove to be the first ‘post-covid’ year for the real estate market as countries like Slovenia declare an end to the pandemic. While there are many reasons to be optimistic, caution should be exercised for the challenges residential property will face due to the drop in housing development during COVID and rising lumber costs. Even in the face of COVID, real estate remains a competitive asset that is bouncing back from the unimaginable and remains bullish for 2022.

Produced in association with the FG Magazine

Global Banking & Finance Review


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