COVID-19 PANDEMIC: Is Real Estate a Resilient Target?

Although it is easy to concentrate on the short term economic impact of COVID-19, the longer-term societal and real estate impacts should not be overlooked. The impact and aftermath will change our way of living and working, potentially leading to new operational models. Could it prove to be the catalyst for certain secular shifts?

Philippine government has imposed a Luzon-wide lockdown to prevent the spread of the virus and one of the most obvious repercussions is the suspension of work operations. This has led businesses to adapt remote working arrangements for business continuity measures. Further, the outbreak could put greater pressure on markets which are already in the late stages of their cycle, creating the potential for a delay in investment activity and softer rental growth than previously forecasted by analysts. In the same way, the largest impact of COVID-19 is undeniably human. The long term trend towards higher-density living and increased collaboration spaces potentially heightens risks of transmission. Mitigation protocols will need to be developed.

So, the question is, how do we keep our real estate transactions up despite the glaring effects of this pandemic and how will real estate professionals prepare if something similar happens in the future? Leading global real estate firm, Jones Lang LaSalle, advocates a corporate response that focuses on Preparedness, Protection, Monitoring, and Communication.

This is an ongoing process and priorities will change over time as businesses review long-term decision-making strategies. We can already see that COVID-19 may have long-lasting consequences (both positive and negative) that will affect businesses’ decision-making strategies in the long term.

Although the short-term attention of businesses will go on business continuity, there are significant longer-term implications for real estate decision-making – with a renewed emphasis on the ability to react quickly to a similar event in the future with a focus on operational resilience.

It may be relatively straightforward to assess the immediate and direct real estate impact of COVID-19—with an escalating number of event cancellations, office closures, travel restrictions and quarantined areas, however, the indirect effects are yet to be fully realized. Cities and countries which have seen the highest numbers of cases will certainly feel the direct impact the hardest, but all locations will experience the indirect effects, be it a reduction in tourism, breakages in supply chains, postponement of infrastructure works or even changes to the way we live and work. We can certainly see that the longer-term consequences of the outbreak will continue to filter through in ways that were far from obvious at the start. Human, economic and business impact are inevitable, but new measures, policies and procedures and investing in the right infrastructure, will help mitigate risk in the short and longer term.

Written by Maq Agapito