There are no bold decisions, no big moves: everything seems to indicate that the New Year will be transitional until it reaches real estate normality in 2022. But the take-off phase presents opportunities for those who can read the market. Let’s take a tour of the top real estate trends of 2021 with Fahim Moledina.
Opportunities in the housing market
Especially in the first half of 2021, home sales prices will maintain a moderate downward trend. However, some owners will be forced to give liquidity to their properties, which represents a purchase opportunity at a good price for the small investor who has emerged unscathed from the COVID-19 crisis.
The real estate sector has been one of the most impacted by COVID-19, slowing down its investment activity around the world. The decline in consumption and confidence has directly impacted the real estate ecosystem, structurally affecting offices, shopping centers, and urban hotels based on business demand. However, the impact will be speculative in the logistics segments, from e-commerce to the vacation hotel. It is anticipated that the recovery of tourism will generate a lot of activity and sector concentration. For its part, living (residential for rent, student residences, and senior living) is growing due to the gap between supply and demand. It continues with the growth path that it was already experiencing before COVID-19.
The financing market has slowed down due to the decrease in investment volumes. Its main trend is the relevance that alternative financing (non-bank) will play in boosting activity during the recovery period.
5 trends in the real estate market for 2022 by Fahim Moledina
2020 is a year we will never forget. The impact of covid-19 has been felt in all sectors. The real estate sector has brutally suffered from the pandemic, especially in aspects related to investment returns or falls in the demand of the rental market. But in other sections, it has shown surprising resilience, largely thanks to the countries’ interventions to mitigate the effects of the different confinements.
2021 is presented as a year of recovery, especially in the second half of the year as the vaccination campaign progresses. It will be a period in which interest rates will remain low – they are not expected to rise until 2023 – in an environment where inflation will also remain low. It is expected, of course, that investment will grow by 8.5% throughout the year to return to pre-covid levels for the second half of 2022. With these guidelines, Fahim Ekbal Moledina stocks some of the trends in the real estate sector.
- Housing targets the job market
It is expected that in 2022 government aid to alleviate labor market problems may disappear. The impact of the coronavirus will have consequences on the rental market, which should be focused on greater operational efficiency and put more focus on the tenant while providing spaces with greater flexibility. On the horizon, the possibility of expanding the housing catalogs to accommodate rents for reduced income and official protection will help diversify sources of income and enhance the historical shortage of social housing.
- Offices and telework
Long-term rentals remain a guarantee for tenants. They should pay special attention to aspects such as hygiene, well-being, and versatility. For landlords, this is a good time to negotiate lower prices. However, it will be necessary to re-evaluate the impact on the cost and productivity that telework will have concerning face-to-face.
- Opportunities for retail
The main opportunities will be in the food sector, large shopping centers or iconic places in the center of large cities, and the refurbishment of premises to give them a second life. Property rents and values will be recalibrated down, offering new opportunities for investors.
The rapid growth of the online channel due to movement limitations imposed to prevent the spread of the coronavirus has increased the demand for facilities capable of managing the cold chain. Additionally, supply chains have grown and been reconfigured. There has been an increase in inventories and greater automation, while the supply of logistics facilities has shrunk.
- Hotels, the most affected assets
The tourism sector will still suffer throughout 2021. This will pose a challenge for large operators when dealing with debts and payments. In this sense, improving operational efficiency, strengthening demand, and reducing supply should help increase income in the tourism sector. Facing the most immediate challenges, experts recommend strengthening customer focus, reducing costs, consolidating, and repositioning.
In 2022, the aforesaid and other solutions will begin to mature to accomplish more efficient and flexible organizational models, less polluting and costly.