The Covid-19 crisis has brought virtually all sectors of the world to a review of both processes and prospects. The world was simply not ready for the outbreak of this pandemic, and no one really is ever ready for any pandemic. However, this pandemic has struck the world in more ways than we can simply imagine. The effects of this pandemic outbreak on the real estate sector are innumerable; however, we will attempt to summarize them all into relatable points in this article.
Itay Barak, an online entrepreneur explains:
“The real estate industry has held many profit prospects over the ages. However, in the wake of the Covid-19 crisis, there have been many downturns for the industry. This trend will likely continue for quite a while before the world comes to a new status quo. Although real estate investments hold a long term profitable prospect no matter how things look momentarily, one must still note that the Covid-19 crisis has changed the way the world will ever refer to normal again. It is starting to get obvious that some buildings (which constitute a significant unit of real estate investments) are no longer relevant to the times we live in. Others need a proper restructure to allows for features that will be relevant in the coming days of the world evolvement.”
Tal Valariola, also an entrepreneur in the finance and tech industry adds:
“Placing investments in real estate, hold a profitable prospect in the long run, but one must place strategic investments when the world is evolving fast into a new status quo of normal. Some of the vital considerations for putting investments in real estate are the factors that we would discuss in this article.”
Guide To Investing in Real Estate in 2020
There are several factors to consider in making real estate investments in 2020, and listed below are some of the. We will highlight the red marks to watch out for, and in contrast, make recommendations that can help guide toward a smiling real estate investment even in the Covid-19 crisis. These are tips that are brought to you by Tal Valariola and Itay Barak.
Vacation Houses and Lodging Centers
With the wake of the Coronavirus, there has been a lockdown of activities in many regions of the world. Many who planned vacation or 2020 no longer look at the prospect of having their holiday this year. Hotels have already seen the plight of this trend. This factor is so because hotels that generally thrive on the number of guests they receive per period are also affected by the lockdown. Thereby, even when there are visitors, the lockdown restrictions forbid them from hosting such guests. This trend has caused a lot of downturn in the value and the profitability of vacation houses (such as hotels, motels, guest houses, et cetera) in times like this.
The downturn of the profitability of vacation houses has made many people question the profitability of this part of the real estate industry. Pre-Covid-19, hotels, and vacation monuments hold some of the most prospective prospects of the Reals estate industry. Still, since the wake of the Covid-19 crisis. However, many vacation houses have lost a lot of relevance to the times we live in.
It is likely, however, that the value of vacation houses will rise once again when the world settles into a norm, but the value of vacation hosting properties is on the downward turn at the moment. As an owner of a vacation house, it is advisable to hold on to your investments because the value of these investment forms will rise again. As someone interested in investing in real estate (especially coming from the angle of vacation houses), many hotels and vacation houses will be listed for sale at tremendously low prices at times like this. It is to be noted that real estate investment, in the end, holds a profitable long-term prospect, so buying a cheap vacation house is likely to be a valuable investment in the long run. Choosing to buy or not buy a vacation house in a time like this should not just depend on the value of the property, some other factors such as location, accessibility should also be put into consideration.
Whatever the case may be, the value of vacation houses has reduced, and a lot of them will be listed for sale in the coming days, and buying a cheap vacation house in a time like this is likely to yield a profitable long-term return. If you are an investor that seeks a quicker return, it is advisable to look away from vacation houses momentarily.
Offices And Working Spaces
The role of offices has been a very salient one to the work process of the world for a very long time. An office allows an industry’s workers (or a company) to gather in a place to sort out the purposes which the company has set out to achieve.
Pre-Covid-19, people go to work every day, and as such, office spaces held a very crucial role in the running of the world. However, since the Coronavirus, a lot of companies have laid off their staff to produce more with less. Many employers have sought freelancers more since the dawn of the Coronavirus. While this trend may be a good one for business owners and executive members of a business, it is not one that adds value to the real estate industry, because many working spaces have been closed down since the wake of the Coronavirus.
The office and working spaces desolation trend have caused a reduction in the need for office spaces because, as a matter of fact, many offices have continued their essential processes using the agency of technological innovations on the internet. The internet has brought offices a cheaper alternative to actually paying for office space, and this leaves the question: what happens to offices now?
Even when Covid-19 ends, it is most likely that offices will continue the operation of their services on the internet as it provides a cheaper alternative for them. Some offices that require the need to have a physical meetup will still engage the use of physical office buildings; however, the future of physical office buildings is not looking as prospective as it once was.
The business prospects of buying an office space in the Covid-19 crisis depend on the buyer. If you intend to buy an office space in preparation for your company’s return plan from the Covid-19 crisis, this may be a wise decision as the value of office properties has significantly fallen since the rampage of the Coronavirus. You are likely to get an office space for less the value it would have cost before the Covid-19 crisis. If you want to buy an office space as an investment for making income post-Covid-19, as earlier stated, this may not be the best of decisions because many companies will not return to the use of physical offices. If the office has the set of equipment that will empower people and processes to get into work without aiding the spread of the Coronavirus. Maybe, just maybe buying such an office can be a wise decision.
Homes And Living Spaces
The concept of homes has been in existence for long, and it will continue to exist long after even the Covid-19 crisis is over. The advent of the Covi-19 crisis prompted most governments around the world to declare a lockdown on activities in their nations, and the global lockdown has caused a lot of people to stay away from offices, social gatherings, and many other parts of the former normal life. All these factors have caused people to stay indoors more, and this trend is even more likely to continue post-Covid-19.
The Covid-19 crisis has affected a lot of spheres negatively, but it has also helped the world evolve and see more advanced development trends. Many people work from home now. There are virtual parties today, many meetings and conferences hold via the internet today. A lot of things which held a significant part of our finances are cut down because of the Covid-19 crisis.
The trend of home renting and buying will likely increase in the coming days, this is because as many have been restricted from moving around, the number of home squatters are likely to reduce, and moreover, since many educational institutions have resolved to use the digital media for the transmission of their lessons and examinations, students will have to move to their homes with their parents (or guardians as the case may apply).
The pressure on home usage in the time of the Covid-19 crisis has caused a slight increase in the price of home properties, and this trend is likely to increase as we progress down the path of life in the coming days. The lockdown has caused a slowdown in the rate at which buildings constructions are being completed, and with the population increase, the pressure on homes is likely to increase, and this spurs the need to have more homes built, especially post Covid-19. Buying a home at this time would be a very profitable venture as the need for this venture exists now more than ever.
Warehouses And Storehouses
Warehouses are used by factories and industries to store their products and, sometimes, raw materials. With the advent of the Coronavirus, there’s been a downsizing of many industry staff. This staff downsizing has, in turn, reduced the production lead across global cycles. The downturn of industries, however, has not had a very significant effect on the value of warehouses. The Covid-19 crisis has not affected the value of warehouses very much because many industries are still in production, and the industries that require the use of warehouses are heavy-duty industries that most probably purchase materials for the long-term production at once. Therefore, warehouses are still very engaged in the Covid-19 crisis, and the trend will go on like that even after Covid-19.
Buying a warehouse now would be a wise investment decision. However, the buy is not as important as the factors that surround the warehouses, such as location, the road networks, proximity to industries, et cetera. But, when all these factors are in their proper place, buying a warehouse in the Covid-19 crisis is a sagacious investment decision.
It is, however, to be noted that warehouses cost a lot of money and may not provide a quick Return on Investment (ROI), so an investor who seeks a fast ROI should probably look at buying a home instead of a warehouse.
Landed Assets
Lands are a significant unit of measuring real estate investments. Lands have and always will be relevant regardless of the kinds of pestilences that plague the world. The reason for the evergreen relevance of lands is because lands are like a blank sheet which the owner can convert into anything he/ she desires
The value of lands (especially empty lands) has not been affected by the Covid-19 crisis. Buying land during the Covid-19 crisis is, therefore, an excellent investment option, and this trend is likely to continue for a very long time.
Just like other real estate assets, the value of the land depends on how much development surrounds the land in later times, as well as a series of other factors that help gear the land investment of the investor toward a very profitable return. A real estate investor can buy a landed property and choose to sell in the future, depending on how much development comes around the land in the future. Some investors buy the land and lease out to other investors who make use of the land for a speculated period. Whatever you decide to do with the land, the land has always been and will always be an excellent form of real estate investment.
Lands, in most cases, appreciate over time.
Factors To Consider Before Investing In Real Estate In 2020 (During The Covid-19 Crisis)
It is expedient that an investor put a lot of factors into consideration before placing their financial commitments in anything, including real estate investments, especially in a time of global uncertainty like this. There are a series of factors that typically guide real estate investments. However, it is essential to meticulously consider the factors that govern real estate investment decisions in 2020 before placing investment finds in them. We have listed and highlighted some of the significant factors to consider in making real estate investments in 2020. Please note that the things listed here do not encircle all of the factors that guide real estate investment. They, however, show some of the most crucial factors which affect the present and future value of real estate assets.
Accessibility
Before you choose to invest in any kind of real estate property in 2020, it is crucial to assess how accessible the property is to the world. In measuring the accessibility, one must put into consideration the fact that the world will not remain the same after the Covid-19 crisis. So the accessibility of a real estate property must put into account.
The term ‘accessibility’ is entirely relative to the purpose of the real estate property. However, some generic accessibility terms can be used to measure the prospect of a real estate property in the coming days, and some of them are highlighted below:
- Proximity to Electric power Supply
The world has evolved into one that almost entirely depends on electric power for the effective running of processes and systems. Any property that has a good supply of electric power will prove relevant irrespective of the Covid-19 crisis.
- Internet Proximity
The internet is another entire world on its own, and a lot depends on the internet today, more than ever. Any property that’s close to a good internet connection supply will remain relevant across time frames.
Location
The location of the property is probably the most important of how good or bad a real estate investment will turn out to become in the future. Although the location factor is also relative to the purpose for which the property is intended. We are considering the financial and investment prospect of the property. Landed property in Lagos, Nigeria, no matter how expensive it is, does not hold the same prospect as one in Manchester, United Kingdom.
Although all real estate investments eventually yield profitable returns, in the end, an excellent location will boost the ROI of the investor in a short timeframe.
Relevance
This factor is another essential one that needs to be put into consideration before investing in real estate. The relevance factor seeks to understand the importance of the property to recent developments. To highlight the meaning of relevance to the real estate investment decision process, buying a medical laboratory or a hospital property holds more profitable prospects now much more than buying a hotel.
Conclusion
The real estate industry is one of the oldest of the age; it has withstood the test and trials of time. Investing in real estate even in this Covid-19 crisis still holds profitable prospects; an investor just has to consider the investment options carefully.
This post is brought to you by Tal Valariola and Itay Barak