In the blink of an eye, we have come to the final month of 2020 and what a year it has been! Now that the mother of all crises has dawned upon us, are there great opportunities that lie ahead in the real estate industry?
Different Strategies
Many have lost their jobs and businesses are badly affected. These unprecedented times indeed have shaken the property sector not just for the real estate developers but also for the buying community be it first time homebuyers or investors.
While those hunting for bargains may want to take positions now arising from the pandemic-stricken economy, everyone else is very careful and have adopted a “wait-and-see-attitude”.
One thing is for sure, the strategy for property investment is no longer the same as previously. Not only do investors need to enter at the right price and location to ensure tenancy demand, financing from banks is even tighter now as liquidity remains a key consideration from the banking institutions.
It is still very much a buyers’ market in the context of local urban property demand. This is because urban properties supply is always available while prices remain stable.
There may be those who face distress situation be it in the commercial sector or residential market. But, I am pretty sure owners of distressed properties will not easily give up on their prized assets unless they have speculated in recent years and took on more than they can chew!
Coupled with the pre-Covid-19 oversupply situation, there is an urgency to relook into not just policies such as those announced in the recent Budget 2021 but also policies to ensure the immediate turnaround of existing assets for a more sustainable yield.
CAN WE SPOT OPPORTUNITIES?
As the economy slumps, businesses are affected and this results in a surge of vacancies across almost all segments of the property market.
While there is a need to overhaul and redesign a business model to cater for such times, these may come at a cost to the business. For those who have no choice, the last resort would be to release the assets to save the business and their livelihood.
How many would stay on to adapt their approach to redesigning of spaces and reinvest into the much needed change?
Now that CMCO 2.0 is still in force and there is no moratorium being extended or tax incentives for landlord to offer 30% discount to their tenants, a new nightmare is looming for SMEs and businesses ahead. No one can actually predict what would happen despite news of two giant pharmaceutical companies announcing near-perfect vaccines likely to be accessible to the general public a year from now.
Regardless, there are plenty of opportunities for those who can see the changing trends and take the path less travelled.
The enterprising ones could leverage on available spaces to be converted into profitable ventures. For instance, some badly affected hotels are offering their rooms for rental as working space on a daily basis.
Even the retail mall industry is repurposing some of their space either as warehouse cum distribution centres or as live stream commerce services site. Online shopping has become a trend causing logistic hubs to work round the clock to ensure deliveries are on time. Demand for industrial real estate naturally surges ahead. This includes shoplots which can be turned into fulfilment centres.
Proactive measures by entrepreneurs, specifically propreneurs, who are bold enough to repurpose real estate spaces in various segments of the market, forms an actual usage driven investment that could benefit the industry.
In other words, landlords cannot rest on their laurels by going back to the good old days of just looking for tenants based on their asking rent alone. One needs to see beyond the value of their asset and even go to the extent of jointly investing with their tenant for a new commercial usage for the premises.
Having said that, the most impacted would likely still be the residential overhang from the primary market as well as the plentiful choices from the secondary market.
In summary, businesses must pivot towards multistream income channels apart from downsizing their organization headcount for survival purpose.
Property stakeholders need to find ways to be more creative to stay afloat and the key could lie in collaborating on resources and connections. Just as the tech world anticipated the 5G era, real estate too would be welcoming a new era of market landscape eventually, thanks to Covid-19!
