How COVID-19 Has Affected the Commercial Real Estate Sector

The country’s increase in coronavirus cases has caused uncertainty and mistrust in the commercial real estate sector. Construction operations and business transactions will cease while the diseases are under control because the majority of the country is under lockdown-like restrictions and health is the main priority.

The work from home policy implemented by some businesses during the shutdown last year had put a lot of strain on the office sector. Foot traffic in retail was significantly down, which also had an influence.

According to Knight Frank, new completions in the office market decreased 42% YoY, while transactions fell 35% YoY to a six-year low of 3.7 million square meters (39.4 million square feet) in 2020. Rentals and vacancies were both under pressure.

The Effects of COVID 19 on Commercial Real Estate

With many corporations declaring permanent work from home, the demand for office space is projected to remain high in 2021. They might leave workplaces due to the pressure on rentals, which would increase inventories.

Office hubs are quickly becoming the next big thing, and there may be some demand for smaller premises in various parts of the world.

In order to avoid long-term costs, this will also allow corporations to investigate prospects in flexible workspaces. They will also search for more flexibility and latitude in their lease agreements.

How swiftly life returns to normal in India will depend on the scale of the mass vaccination campaigns and the rate at which the epidemic is contained there.

Due to low foot traffic, closures, regulations, and the increasing adoption of e-commerce, commercial enterprises and shopping locations such as malls also had a bad outlook in 2017.

How Much COVID-19 Pandemic’s Effect on the Real Estate Sector

When the government implemented a two-month countrywide lockdown between March 26 and May 30, 2020, there was no demand for apartments because individuals do not make such large investments during a crisis.

As a result, no new homes were constructed.

Since staff, including construction workers, had to go home, about 6,000 REHAB member projects had to be put on hold as a result of the lockout.

Owners of housing businesses were particularly concerned about how they would pay their staff due to the large number of customers who were unable to make their payments on time and the financial crisis.

The government permitted the use of untaxed income to buy real estate, land, and apartments without requiring the source to be disclosed in the budget for the current fiscal year, which aided in the recovery of the real estate sector following the Covid-19 catastrophe.

Additionally, market participants assert that banks and NBFIs offer home loans at extraordinarily low interest rates of less than 9% as a secured investment for the lenders.

New Real Estate Industry Trends Following COVID-19

The COVID-19 situation started to improve, giving the real estate market new hope. The market saw a few new trends and jumped at the chance without thinking twice.

More people in Dhaka are expressing a wish to buy a new apartment. After the epidemic phase, the industry quickly began to turn around.

Long-term behavior changes brought on by the COVID-19 event may alter demand for other real estate assets like hotels and short-term rentals.

People are now considering the needs of children while buying homes after the pandemic era.

Even a brief delay in business travel could have long-term repercussions if alternatives like video conferencing turn out to be adequate or even preferred.

Cross-border corporate travel demand may be further decreased by the near-shoring of supply chains, and consumers who are afraid to go internationally may switch their leisure travel to domestic locations.

Following the COVID-19 era, Bangladesh’s real estate market may now exhibit the following new trends:

1. Today’s Urban Environment Has a Trend for Studio Apartments

Due to their single large room that ranges in size from 250 square feet to 1000 square feet and is furnished with a bedroom, dining lounge, tiny kitchenette, and accompanying facilities, studio apartments make the perfect living place for solitary city dwellers and small families.

2. Government Goes Green, Hollow Bricks Become Necessary

According to Md. Shahab Uddin, Minister of Environment, Forests, and Climate Change, using hollow bricks and blocks will gradually be required in the country by 2025 in order to prevent air pollution.

3. More steel structures are being used in cities

Cities now have more prefabricated steel buildings as more companies opt for this style of construction due to its simplicity and security.

This building design is easier to construct and more resilient to natural calamities like earthquakes.

Opportunities in the Real Estate Sector Following COVID-19

In terms of historical context, this sector has been active in commerce since just before our independence. For Bangladesh, more changes are still to come.

According to a recent estimate, Bangladesh’s economy would have the 28th-largest global economy by 2030. Our estimates indicate that over the next 50 years, at least USD 700 billion will be invested on housing alone.

There appears to be a lot of possibilities outside of Dhaka as well, and these groups can be converted into customers with the correct offering and location.

Using precedents from other nations, we can discover some example strategies that have been applied to address the real estate issue for the general population.

Is the market for commercial real estate expanding?

The market for commercial real estate is growing. The market for commercial real estate will be valued $992 billion in 2020, according to studies.

By 2021, this amount is anticipated to increase by $1 trillion, or 3.1% annually. Despite progressively increasing from $821 billion in 2011 to $1.16 trillion in 2019, the commercial real estate sector’s worth began to drop in 2020 as a result of the COVID-19 outbreak.

How Large a Sector is Real Estate?

Commercial real estate is one of the largest industries on the planet. It is the fifth largest industry in the world, with a $16 trillion worldwide economic impact, according to study.

For a variety of reasons, the size of the industry is crucial when making investments. First off, due to its size and diversity, there are investment opportunities for almost every risk profile and time horizon.

Conclusion

The majority of all the age groups surveyed. In addition, 88% of them think it makes sense to invest in real estate. Real estate investment values are determined by supply and demand, therefore the fact that so many younger generations are interested is favorable for future pricing.