One of the interesting things that has happened during the pandemic is the realization that we are actually more resilient and agile than we give ourselves credit for.
As a mother of 2 school-going children – I find myself suddenly busy with supervising Home Based Learning for my kids’ lessons.
I realize that technology is more important than we give credit for. Thanks to Zoom and WhatsApp – I am still able to communicate with my clients via video calls and tele-conferencing.
And surprisingly, even during this circuit-breaker period – I still managed to clinch and close deals.
A New Paradigm In Working & Learning
As I observe the trends in this pandemic – we are headed to a shift in the way we work and learn. The coronavirus has profoundly changed the way people work and travel, most notably those who are now working from home and are likely to continue doing so for some time, either on a full- or part-time basis.
Will our new way of Working From Home (WFH) changed the real estate investing landscape as offices are less in demand?
The commercial property market will be impacted.
But it will really depend on:
- how long the necessary health guidelines need to remain in place,
- how willing employees will be to return to an office as guidelines are relaxed and
- how employers respond to the needs and wants of these employees.
Will WFH Lead To a New Focus On Residential Homes?
Unlike other asset classes, buying property is a tangible experience of seeing and feeling as much as it is a financial assessment process.
Government measures to prevent the spread of the virus have made this process harder, but not impossible.
People who need homes – they will continue to buy the home they need despite all the social distancing measures.
Property agents are also stepping up to the challenge and are helping owners to do video walk-throughs and virtual viewings to help buyers make their decisions.
Based on my observations and current trends happening, here are some of the possibilites that might occur:
- a shift towards bigger homes so it is more comfortable as people are spending more time at home
- there is a growing need for a space to work comfortably from home
- growing interest for resale homes as these units are ready to move in
- as commute becomes less of an issue, buyers might be open to buying bigger homes located further away from the central region
There is no concrete hard data for the above for the Singapore market. But there has been trends observed in telecommuting in this NYT article that was written in 2019 – before the pandemic.
I extract a paragraph from the NYT article below:
“The importance of home offices has almost begun to rival the attention that buyers give to kitchens,” said Robin Kencel, an associate broker with Compass in Greenwich, Conn. “Where they will work is on nearly every buyer’s mind.”
While some buyers just want a comfortable space to plop down with their laptops, others want a dedicated room where they can shut the door and take calls without interruption. “Back in the day you’d have the mahogany-paneled library, but we’re not living in a formal world now,” Ms. Kencel said. “Now, people are looking for more of a textured, comfortable feeling — natural light, doors to a private terrace, and great wall and floor finishes.”
This is a potential emerging trend that we should keep a lookout for.
As an agent tasked to sell my client’s home – I will take note of this and use it as part of my selling script if I know my potential buyers are working from home and will spend a substantial amount of time within it.
The Pandemic Impact On REITS
The CNBC article aboves discusses the impact of COVID-19 on REITS.
In Singapore, Capital Commercial Trust is the most exposed, with 10% of its total occupiable floor space leased to coworking operators, said Tan of DBS. Just last year, it leased an entire 21-story office building in the city-state’s central business district to WeWork. – CNBC, 21 May 2020
We all know that panics are the time to buy in the shares market. The challenge is that when you’re smack in the middle of a crisis, it’s easy to imagine things getting even worse.
The problem is that if just about everyone is thinking the same way then, almost by definition, it’s already priced into the shares market.
It is our responsibility as investors to be aware of the risks we’re exposed to.
Protect Yourself – Not Just From The Pandemic But Other Risks
The point of investing is to protect yourself from a wide range of risks in the future – like inflation, rising debt, and an aging population. The truth is this – cash and bonds – will not offer you the same protection.
While cash is king during a crisis – it is because of its ability to be quickly deployed to hedge against risks.
Inflation will be the next threat to be aware of as governments around the world roll out various stimulus measures to keep businesses open and the economy running. That’s when your cash start to be devalued in this fiat money system we all live in.
Conclusion
Be aware of how the dominoes might fall.
It’s funny that we spend so many hours each week working hard to earn money and build our careers, but then spend very little time thinking about how to put our money to good use.
But first – you must be able to recognize these powerful influences and how it will impact your portfolio.
With mortgage rates going down again the environment is one that does make for investment opportunities – for those in a position to make the move.
Opportunities still abound in the post-circuit breaker Singapore residential property market. For the resilient investors, who are in it for the long haul – they will be seeking out ways to weather the storm successfully.
Keen to revisit your own property portfolio? Drop me a WhatsApp message to arrange for a no-obligation discussion.
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