The Impact of COVID-19 On The Real Estate Business

Real Estate Business, since the longest period, though has been taken as a type of one that is not affected by any external influences but indeed has to suffer some consequences due to some factors. Especially for countries like Nepal, which is still in the pace of development almost every sector has to suffer severe consequences whenever there are some issues either in the national level or worldwide. The current scenario that is related to the biggest fear we call COVID-19 definitely have had such a severe impact on almost every aspect of human life starting from their personal to the professional world. Especially for a business that involves direct sales and product visits, COVID-19 have had an impact of another level. As we are familiar with the fact that the real estate business, since a few years has been penetrating the market more than any other business and carries potentiality of flourishing even more in years to come. This is due to an increase in urbanization, especially in places like the capital city and people’s choices of spending the rest of their lives in a place as per their preferences. So, we are going to collect some ideas about how has been the pandemic, or COVID-19 that we basically address it as has an affect on the real estate business.

People’s preferences of staying at home

Since we know, right from the starting of this pandemic, humans worldwide are practicing social distancing so as to keep them safe and protected from getting infected or affected by the Coronavirus. This has resulted in a trend for people to stay at home most of their time and not mobilize themselves physically in the outer world. Here comes the challenge in the real estate business due to the trend that has been set. The real estate business includes buyers’ and sellers’ direct involvement. The process includes various activities such as site or property visit and a lot of table talks. Which of course is disturbed by the pandemic and until and unless the issues are not solved, conversion in the field of real estate cannot be expected. However, it has enabled potential buyers to make necessary researches about the property they want to buy using their spare time at home or places they are staying at. In a digital world like today’s, using several social media applications has made it easier for both buyers and sellers to visit sites virtually for acquiring basic information they can discuss in the future.

Wrong concepts about fluctuations on Property pricing

Of course, for a normal person with not so much knowledge about how the real estate business works, it is obvious that the ideas such as the downfall of the prices of properties might surely happen to get into the mind. But the reality might not turn out to be as expected. The rate for the land and property is going to remain intact despite the consequences that have to be boring due to the COVID-19 pandemic. However, ones with some pressures of external monetary factors such as loans might negotiate to some extent and both sellers and buyers can finally land on the same page. The interest rate especially for real estate businesses is higher and this might eventually compel the seller to settle for a little less. But that definitely does not decide the fate of the entire real estate market. Both buyers and sellers, as a result of which will have to be ready to come under some suitable negotiations, that support both the parties if wanting to make the deal work.

Variations on buying and selling due to unemployment/economic crisis

The job and professional market undoubtedly have had one of the biggest impacts on due to COVID-19. Not just a personal aspect, but also the professional factor of people has been vastly disturbed. Due to the lockdowns maintained by the government of the entire nation worldwide, people tend to stay at home and not at their work despite their interest and necessity. This definitely has reduced the production of service and ultimately affected the global economy. Experts have also suggested that the economic crisis invited by COVID-19 will probably take a lot of years before it could compensate for the losses. In such a situation, people with possible plans for buying properties before the pandemic abide themselves from doing so as a result of which the conversion rate is and will not remain as expected. People tend to save money for future basic use and that does not surely mean the business world of real estate is going to collapse but the rate of transactions happening will somehow be affected.

Possible changes in methods of evaluating a property

Since discussed the consequences and changes that the COVID-19 Pandemic has brought upon humanity, the possibility of few changes in evaluating the property can be expected. People tend to more focus on also securing their and their family’s health aspects along with other necessities. Not just their wish of staying in a fancy house, but also whether or not that decision will support their health has become a major concern in today’s context. Buyers, no doubt will evaluate each and every possible pros and cons (especially concerning their health) before coming to some conclusions. The real estate market, however, is not going to be affected on a larger scale but definitely will have to go through some changes as per the demand and necessity of the customer.

Lack of supply and cost variations on raw material

Undoubtedly, like every other business that is based on selling products, needs to produce it. Especially a country like Nepal that lacks the production facility of raw materials that are needed for the construction of properties has to import them from countries that are nearer such as China and India. Due to the COVID-19 pandemic, the issues of border closure have resulted in a lack of supply of raw materials that are accordingly needed. Therefore, this has resulted in slowing down the production or the construction that we basically refer to. Not only this is the issue of the present context, but it is also anticipated that the supply may get a slower pace once the world is back again to its normal state. Experts suggest that the prices on such raw material can possibly vary due to the losses that are invited by the pandemic. In such a scenario, real estate business and the investors have to face some hike on their expected budget and can plan for the future Return on Investment accordingly. You can see one of our articles, How to Start Investing in Nepal in Real Estate?

Affect of COVID-19 pandemic on property rental business

The property rental business has always been one of the major sources of earning for property owners especially in metropolitan cities like Kathmandu,  Lalitpur, Bhaktapur, and many others. This has been a very famous trend for so many years due to frequent incoming and outgoing of people throughout the country. Many household’s financial fate depends on the property rental business that has been hugely affected by THE COVID-19 pandemic. As discussed, the lockdown has resulted in huge unemployment due to which the ones using the renting facility are not able to pay rents on time and has hence the owner has to bear the consequences. The government’s decision of the ones using the facility not paying rent for the entire period of lockdown has added even more problems to the property owner. The situation is, the properties that once used to be occupied are being left vacant. Even the properties that were allowed for business purposes are being shut down due to losses that the business owner has to bear due to pandemic. And even the ideas of running new businesses are not in trend at least until and unless the issues of COVID-19 pandemic are not completely solved. If we see, this is the right time for real estate businesses and agents to flourish since there are a lot of properties vacant and very few consumers. If hit the market strategically, real estate business can boom in a way no one has ever expected.

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