Even with the lifting of the Movement Control Order (MCO) and the Conditional Movement Control Order (CMCO) followed by the Restrictive Movement Control Order (RMCO), it is anticipated that living alongside Covid-19 is inevitable.
Therefore, property matters need to be circumvented around this pandemic for at least another 18 months or so.The following is the outcome summary of the webinar meeting held on April 8, 2020. Concerns were raised and solutions proposed pertaining to real estate concerning the various International Real Estate Federation (FIABCI) chapters. Here is a bird’s eye view of the analysis and proposed ideas coming from all side of the divide – as FIABCI unites with fellow real estate practitioners from all across Asia.
General remarks from FIABCI World President Walid Moussa
– Real estate in all markets are affected with possible drop in prices all around.
– The e-commerce industry is flourishing with online shopping and ordering of essentials.
– Following this Work From Home (WFH) trend, more companies are expected to adopt this practice for a prolonged period.
– Companies could also steer towards implementing co-working spaces and/or hot desks.
– Rentals for offices are expected to drop (both in occupancy and values).
– Purchasing power for real estate will also drop. There will be more demand for affordable homes from the private developer and Government.
– The secondary market will also be affected alongside student housing.
– With the social and political uncertainty, security will be of utmost importance.
– Projects with shared and/or communal facilities will be badly affected due to
social distancing.
– Expect major shifts in consumer behaviours towards spending patterns and demands.
– Governments will play very critical roles in helping markets to recover globally which include waiver in taxes as there will be default and/or requests for deferments.
– Central banks and/or commercial banks will also have a role to assist their clients in the form of moratorium including waiving compounded interest.
– Landlords also have a responsibility to assist their tenants.
– Recommendations include reducing the asking price of your property or to adopt cash back policies.
– If there’s a need to clear stock immediately to assist in cash flow, drop the asking price.
– If one is able to wait it out with sufficient cash reserves, then plan accordingly.
What’s the best marketing strategy that realtors can employ while we are in lockdown aside from training and home study?
General compilation of answers:
• Learning and adapting to all the technology tools available.
• Plenty of opportunities can be explored using these online and digital tools.
• Use this chance to establish and expand network, profile and professional skills online.
• Reconnect with clients and an opportunity to rebrand one’s organisation.
• This opens up a chance to adopt and adapt to technologies out there which will make for effective and efficient solutions.
This outbreak is also causing a possible collapse in the global economy so most purchasers and/or investors will inadvertently put property purchases on hold. So how can we manage and/or overcome this challenge?
General compilation of answers:
• Purchaser’s behaviour will change according to the situation.
• Luxury products will be badly affected.
• For malls, the tenant mix needs to be revisited in order to fit into this new environment.
• For luxury properties, demand will not be affected much due to the purchasing power of the rich. For medium-priced housing, a reduction in price is anticipated for the next six to nine months. Low cost housing will be the focus for the short term period. The secondary market is also expected to perform better than newly launched projects.
• Go into the digital realm, and improve the safety and health facilities of your
physical business.
• Not discounting the fact that there will be more developments in medical facilities.
• This crisis is not seen as a “crisis” to some smart investors out there – but in fact, it is an opportunity so do not allow emotions to affect rationale.
Are there other alternatives or spaces for real estate properties? Will there be more lease or sale?
• Most developers are going green in order for them to maximise space usage
• For malls, the spaces have to be more connected and have better ventilation
and utilities.
• Home offices will be in higher demand in the coming future.
• Due to social distancing, co-working space will be in lower demand as people do not want to congregate in a space with other strangers.
• Home office will be a more preferred option, such as the Small office Home office (SoHo) which is very common in Singapore.
Here’s a summary of findings and viewpoints from different FIABCI chapters concerning the property market across the region.
[rml_read_more]
Mike Geh, President of FIABCI Chapter for Malaysia
• Prior to the outbreak, the property sector in Malaysia was quite active with quite an amount of stock cleared from the House Ownership Campaign (HOC) held in 2019.
• Performance was within expectation in the secondary market.
• During this outbreak, the Malaysian Government provided a range of assistance from loan moratorium, wage subsidy and cash assistance to both Small and Medium-sized Enterprises (SMEs) and individuals.
• Many upcoming infrastructure projects in Malaysia to drive employment and
the economy.
• Some companies have been given permission to kick-start their operations with strict adherence to safety and health measures.
• Some construction projects are also allowed to operate if they fall under
certain categories.
• It is pertinent to quickly and aggressively to adopt technology into the
business operations.
• Recovery is expected to accelerate in the middle of 2021. For now, it’s time to gather thoughts, plan the strategy and relook at how to change business models to fit into this new future.
Representatives from Malaysia
– The Malaysian Government has announced a six-month moratorium on loans
and mortgages.
– There are also incentives to Small and Medium-sized Enterprises (SMEs) / Small and Medium Industries (SMIs) to ensure business continuity during and post MCO and CMCO, with the RMCO kicking in.
– Affordable housing will be in demand.
– All in all, the authorities are doing a great job in controlling the outbreak and assisting the people.
Representative from Switzerland
– Companies have strong assistance from the Government in the form of tax waivers.
– Retail markets are suffering like the other industries – particularly in luxury products as people are saving cash for essential purchases.
– But to what extent can the Government help – that will be the main question.
Representative from Thailand
– Approximately more than 20 projects were launched despite the current situation.
– The real estate industry is not adversely affected.
– The social sentiment is to avoid gatherings and to stay at home.
– More than 60% of the representative’s company’s workforce are working from home even though the Government has not imposed lockdown.
– The hospitality industry – especially hotels and hostels are on the verge of closing down especially, including shopping malls which rely heavily on tourists.
– Tenants for commercial office lots are asking for three months rental discount.
– Agriculture sectors are not affected.
– Logistics businesses are growing in tandem due to the boom in E-commerce as warehouses are needed.
Representative from France
– This lockdown is an opportunity to rethink businesses for the future.
– The stock market is on the verge of collapsing.
– Plenty of capital will be lost, including in the gold market.
– There is a need to capitalise on the worldwide FIABCI network with experts coming up with strategies and solutions.
– Developers can explore collaborations with the Government on developing affordable houses, and perhaps readjust the minimum and maximum price to also ensure that developers do not lose their profit margin.
– Markets with a high stock of unsold properties will be in for a tough ride ahead.
– Perhaps, niche markets can be explored further.
– All in all, a new emergency plan is sorely needed to counter the effects post-outbreak both for citizens and businesses.
– On another note, pursuing legal discourse from the people responsible for this outbreak could be considered. But the mechanisms need to be worked out – who will pay, and by which jurisdiction should the legal case be pursued?
Representative from Hong Kong
– Sudden surge of cases in Hong Kong.
– Currently, insufficient beds in hospital with a faced shortage in space.
– Hong Kong people are looking with renewed interest to Malaysia after this in terms of the Malaysia My Second Home (MM2H) programme.
Representative from India
– India is also under lockdown. There is no income source for the people.
– The biggest concern for them and developers now is how to pay for their mortgage when there is no income.
Representative from Cambodia
– There was a plan to launch 300 units of property but this has been temporarily delayed by the Government.
– The pandemic outbreak has led to businesses closing down and loss of jobs including those related to hotels and casinos.
– Current sentiment is to hold on to cash – any consumption will be delayed until the outbreak has softened or dissipated.
– Government has imposed more stringent measures, including closing borders and cancelling flights.
– Banks are still open.
– Offices of real estate agencies are still allowed to open, but most operations have shifted to online platforms for now.
– As part of aiding businesses, the Government has agreed to waive three months’ of tax payment and to provide wage subsidy (half month) to affected factories.
– Despite all that, sales are still moving albeit much slower.
– Most customers are not very worried about the situation, and are looking forward to recovery in the shortest time possible.
Representatives from Indonesia
Sulaiman Soemwinata
• FIABCI must communicate positive messages to the wider market out there that this situation is not as apocalyptic as it seems.
• Good progress on the front, as many countries are working on developing workable treatment and vaccine.
• One thing for sure: the market will never be the same after all this blows over.
• In Asia Pacific, we have a population of almost four billion. It is a very important region both in economic and social terms.
• This is the best time for us to dive into digital platforms and technologies to aid our operations.
Budiarsa Sastrawinata
• Prioritise on action, particularly on the safety and health of both staff and customers.
• Constantly engage with your internal and external stakeholders.
• Be in close contact with the Government and gather information for you to plan
your strategy.
• Delay in construction is unfortunately unavoidable.
• Focus on developing good experience for your clients.
Representative from The Philippines
• Lockdown has gone on for three weeks, and will be extended until end of the month.
• The workforce is now fully online and working from home.
• For the real estate sector, we can definitely operate within the digital realm
and remotely.
• This also allows more family time and away from congregation in the workplace.
• During this quarantine, many people are on the internet and are looking for property online.
Representative from Singapore
– Infected cases have gone up drastically recently.
– Can’t do businesses at the optimised level.
– It’s a guessing game on how long it will take to recover.
– Investors and buyers are desperately looking for one another.
– It is however, also the opportunistic moment for agents to work harder.
– Customers now have more time to do proper research.
– Government is implementing stricter social distancing practices in Singapore.
– Government is also allowing commercial sectors to delay the payment of their rentals or commitments on a case-by-case basis.
Representative from Thailand
– Around 80 projects are in the pipeline.
– Cumulative value around US$2.2 million (RM 9.548 million) at 130,000 per unit which is much more affordable than Vietnam.
– Expecting a 60% drop in demand for residential properties in 2020 compared to
last year.
– Office units will be in bad demand.
– Demand for warehouses or logistic centres will be good.
– Overall, expecting six months of impact from this outbreak.
– At this moment, negotiations are ongoing with bank to suspend loan payments for three to six months. There is a slim chance for interest to be suspended but negotiations
will continue.
– This outbreak will change how properties will be designed for future projects – such as less compact and/or congested.
Representative from Vietnam
– Economy is badly hit from the outbreak due to strong reliance on Foreign Direct Investment (FDI).
– Fiscal package and investment measures announced by Government of USD50 billion (RM217 billion).
– Reduction and delay of corporate tax.
– Reduction and moratorium of loan repayment.
– Acceleration of major infrastructure projects.
– Tourism industry is at a complete halt.
– Empty spaces in offices are increasing.
– Moving forward, the economy will bounce back.
– Vietnam is still a safe haven for real estate investment.
– Foreign Direct Investment (FDIs) will continue into Vietnam, and demand for housing will correspondingly increase.
*Information and opinions expressed in this issue are accurate at the time of the webinar.