Imagining a post-COVID-19 world of real estate

This article discusses viewpoints around the impact of COVID-19 on real estate caused by the social and economic collapse due to lockdown. This may present structural shifts in the shaping of real-estate in terms of investment, locations, work, retail, and hospitality real estate in a post-COVID-19 world.

Date added 7 October 2021
Last updated 15 October 2021

This article discusses viewpoints around the impact of COVID-19 on real estate caused by the social and economic collapse due to lockdown. This may present structural shifts in the shaping of real-estate in terms of investment, locations, work, retail, and hospitality real estate in a post-COVID-19 world. In terms of investments, the pandemic has affected people’s jobs, income, and ability to borrow and therefore directly impacted on the real estate sector. The current economic stresses could have great implications on the business aspect of real estate and comparing valuations for example to pre-COVID-19could be biased. Therefore, the authors propose that new analytical tools would need to be developed from post-pandemic data and market dynamics.

The authors then proceed to question whether the pandemic will prompt a change in location preference of households and firms, which could in turn impact on urban growth. With businesses’ technology-oriented strategies to cope with lockdown, this shift could potentially reduce the demand for office and retail space also in a post-pandemic world, further fuelling the vacancy rates of high streets. This is emphasised by the declining volumes of retail sales during the lockdowns and soaring proportion of online retail sales. Research suggests that the demand in the retail-property sector might be reduced in the future and that online retail as well as click and collect services have pushed high-street retailers to other out-of-town locations such as retail parks. The article states that this trend may proceed at a quicker pace in a post-COVID-19 world.

The pandemic has perhaps most significantly impacted on the hospitality sector and related consumer preferences are expected to be different in the post-COVID-19 period. Due to ongoing restrictions, businesses such as hotels will need to change to operate in the post-COVID-19 world and the changes may have to remain for a significant period of time, until all restrictions are lifted, and safety can be ensured.