Amidst Covid-19 outbreak, real estate remains attractive

Updated: Nov 18, 2020

The early days of 2020 has proven to be alittle more happening as compared to past years, due to the outbreak of the coronavirus causing widespread economic disruption and instability.

It has gotten to a point where China, being the main source of goods and manufacturing has ceased factory production till further notice, disrupting the flow of the supply chain to other parts of the world. Schools and offices have taken a hit as well, with work-from-home initiatives implemented to counter the virus outbreak. Resulting in an increased demand for telecommunication and digital infrastructure, from homebound employees  as more and more meetings have gone online.

China's suspension to business activities has greatly affected many countries including Singapore in Q1/2020. Businesses that relied on Chinese customers faced challenges after travel restrictions were imposed. The cornonavirus outbreak has disrupted global supply chains and created a ripple effect on other industries as well.

The Covid-19 has spread to countries outside of Asia, to the US, Europe and the Middle East. It is still in its early days to fully determine the severity and impact of Covid-19.

SARS, H1N1 & Covid-19

The SARS outbreak first started in Guangdong province, southern part of China in 2002 which was said to be an animal virus that infected humans. During the SARS outbreak, tourism in Singapore suffered hard with a sharp fall in the number of tourists. Retail experienced poor sales figures.

H1N1 or commonly known as "swine flu", caused a worldwide pandemic. The flu virus was first detected in 2009 in the US. According to Business Insider, H1N1 had a relatively low mortality rate of 0.2% as compared to SARS, with a mortality rate of 9.6%.

So what about Covid-19?

Reports have indicated that Covid-19 is different from SARS and H1N1, as it is harder to detect due to lack of ability to determine a suitable incubation period. Prevention measures have been taken to reduce the number of cases. Singapore currently has a total of 103 active coronavirus cases, 97 discharged cases and 0 deaths.

China's ability to contain the coronavirus within the country is vital to the economy on a global scale, as the country is the core for production and manufacturing of retail and tech products. This affects global supply chains.

Real estate market

Despite all that, the long-term cycle envisioned for the real estate market remains intact. No doubt the current real estate industry is affected by the coronavirus. However, interest rates for loans continue to remain low and investors with ready capital are still supportive of the real estate market. The market fluctuates and works in cycles. Judging from a long-term perspective, this variability allows investors time to source out properties with calculated gains. Real estate remains attractive.

The US Federal Reserve has announced an emergency measure to reduce interest rates in the US by half a percentage (below 1.25%) to soften the economic impact of the coronavirus. The low interest rates boosts investors' confidence.

As travel restrictions remain, the construction progress of some property developments were affected due to insufficient workers at the construction site, as Chinese workers were either not allowed into Singapore or issued a leave of absence.

The private residential sector, of new home sales are expected to launch as scheduled, as long as the current situation in Singapore does not take a turn for the worst. However, some developers have opted to postpone the launch of their luxury developments, such as Cairnhill 16 and Grange 1866. While for others, its business as usual. Developers have taken precautionary measures to ensure utmost hygiene and cleanliness at showflats. With temperature taking stations, contact & declaration forms to fill and hand sanitisers at showflats. This will increase the confidence of potential buyers to continue visiting showflats.

Due to the coronavirus outbreak, the number of Chinese buyers have slowed down significantly as of Q1/2020. Potential buyers have to put their buying plans on hold until travel restrictions are lifted.

Source: Propnex

The impact on the private residential sector from the virus could be attributed as an opportunity for investors to buy into attractive projects that are hard to come by. For example, The M condo sold 75% of 522 units during balloting day. While Parc Canberra Executive Condominium sold 64% of its units! The market is moving and demand comes mainly from Singaporean Citizens and PRs.

Explore possibilities

Amidst the virus outbreak, 2020 would be the year for opportunity to ramp up and further improve business operations to realise long-term goals. Tap on initiatives implemented for Budget 2020. Understand customers' ever-changing buying behaviour and explore new property investments.

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