There is almost no industry that is not affected by the corona virus. Real estate agents are no exception in this respect. This is evident, for example, from the pictures that probably everyone has seen more often in various media in the course of the discussion about the housing shortage: Viewings of apartments in large cities regularly turn into mass events with a dense crowd. This is the exact opposite of “social distancing” and therefore no longer justifiable during the Corona crisis. This comparatively simple problem could be solved by an equalization, but the current challenges for real estate brokerage in the end customer market are much more far-reaching. Anyone who was a prospective tenant with a good credit rating yesterday may have to reconsider their plans today in view of unclear income prospects. But there will also be significant changes in behaviour on the provider side, i.e. on the side of the property owner. Which homeowner currently wants to let strangers into his house for viewing appointments? Probably many will decide to postpone the sale until after the Corona crisis. On the positive side, however, from the point of view of real estate agents, it should be noted that demand is expected to catch up once the corona virus has abated. Other sectors will therefore be hit even harder. Anyone who forgoes a visit to an Italian restaurant today will not eat two pizzas instead of one after the crisis.
Wiesbaden, March 16, 2020
Covid 19 also meets commercial investors
Numerous transactions by commercial real estate investors will also be suspended during the pandemic. One obvious reason is the traffic restrictions and partial border closures, which in many cases prevent people from travelling to the viewing appointment. In addition, the willingness of commercial investors to invest will decline anyway. The real estate industry has to reckon with possible rent losses for both commercial and private tenants if the restrictions on economic activities are maintained for longer. Nearly all companies will focus on securing liquidity and postpone postponable investments for the time being.
Does the corona virus influence property prices?
It is conceivable that a mini version of the Japanese real estate crisis of 1990 could occur. In Japan, the real estate market collapsed at that time, when many companies wanted to sell real estate during a crisis and discovered that it was clearly overvalued in their balance sheets. A similar drama is not to be expected in Germany. Firstly, there will not be a comparable number of emergency sales – not least because of the German government’s rescue package. Secondly, there is no evidence that real estate in Germany is overvalued to the same extent as in Japan. Still, a higher supply in the market could lead to declining prices. This fall in prices could, however, be counteracted by the fact that the turbulence on the stock markets will trigger a flight to tangible assets and thus probably also increase demand.
How can regional brokers bridge the crisis?
Corona Virus/Covid 19 – When the market is shrinking, competition automatically intensifies. All estate agents who have neglected online marketing so far will no longer be able to afford this luxury. Now is the time to increase their own visibility by optimizing their web presence for search engines. Marketing activities in the social media should also be increased. Of course, contact with real estate owners and investors whose transactions have been temporarily put on hold due to the corona virus should also be urgently maintained. To this end, it is important to invest in the appropriate communication technology where necessary, to the extent that this has not yet been done. Real estate agents must be able to use the communication channels that their clients use. Many companies in the real estate industry are currently converting their communications to video telephony and video conferencing. Here it is important to keep up with the latest technology in order not to lose contact with these customers.