Analysing The Real Estate Sector
For more than ten years, the global real estate market has remained exceptionally positive. Though there have been some minor hiccups through the years, it is still believed that the market fundamentals are fairly solid for residential property. Meanwhile, the commercial property market is in for a price adjustment if the Covid-19 effects continue to effect the society.
Whether you are a beginner or regular investor in the property market, we believe that the information in this article might be helpful in case you are planning to go short. Also, we have tried our best to professionally respond to every question a real estate enthusiast might have to help them invest strategically.
Has the Market Been Stable Globally?
Over the past decade, apartment prices have been growing continuously thanks to stable economic growth over the years. A steady economy, low unemployment rates, and low interests are highly encouraging signs for potential investors in the real estate industry.
Company Name: CBRE Group Inc – Class A
– “CBRE Group might be worth looking into a bit more if you plan to either buy or go short in any property related stocks.”
Primary Exchange: NEW YORK STOCK EXCHANGE INC.
Latest price: 103.92
p/e Ratio: 29.19
Even though the overall apartment prices have remained low in many parts of the world, there are instances where very high prices have been reported. Therefore, due to the lack of available inventory and very high prices, some potential investors have been kept out of business for a considerable time.
The affordability of houses has remained a major concern both for the home sellers and buyers. Thankfully, this issue is being addressed by various reforms conducted in countries such as the UK, the US, China, and Canada. These reforms are put in place to ensure a neutral ground for both home sellers and buyers.
The Real Estate Cycle
Technically, the property sector adheres to a cyclical pattern. However, the current state has made it almost impossible for economists to predict what is likely to happen in the near future. The situation brought about by the Covid-19 has made some individuals wonder whether we should brace for another housing crash.
Luckily, this time around, the fundamentals we are talking about are quite different from those of the 2000s. Despite the challenges brought by the virus, the market size is still growing stably. The Gross Domestic Product (GDP) is growing rather slowly, but there is still hope as it maintains its upward development.
Potential Effects Covid-19 Might Have on Real Estate
Over the past decade, the property services have generated steady income for various companies. Since the virus outbreak, there have been some changes that have impacted this trend. Therefore, the central players in the real estate industry have recorded some losses.
With many developers being unable to receive permits, many construction delays have been observed across the globe. There have also been stoppages, and substantially shrinking rates of return.
Many construction companies and asset owners are faced with a major reduction in operating income, with tenants across the globe struggling to pay their rents. Also, not all real estate markets globally are facing the same impacts. Some are doing fine and continue to accumulate profits even as the world continues to mitigate the effects of the Covid 19.
The future of the property industry is currently hard to predict; the instant consequences of the virus have been made clear. But all companies and other key players are working round-the-clock to maximise their profit. The virus has also led to the dire need for strategic snap changes, though not in every part of the world.
In countries such as the US, the UK, China, and Canada, those who have not started to adjust their marketing strategies should try as hard as possible to catch up. For instance, before the pandemic, there were only a few online real estate companies. However, today, many of them have joined and strengthened their online existence to enhance commercial lease negotiations, tenant attraction, and asset valuation.
The companies are also working to earn and maintain trust, loyalty, and respect for their employees and customers. Most importantly, the operators and owners are obligated to ensure the safety and health of individuals by all means. One of the best ways they achieve this is by understanding and adhering to the needs of their customers and employers.
The Future of Online Real Estate Industry
With the current crisis, it might seem that companies have to move online to remain relevant to their customers. Also, it is easy to think that this move is only temporary and that operators will restore their usual traditional offline operation. But there are way more to look into, more so the permanent changes that might remain after the virus is long gone.
Seemingly, the online real estate market will grow with a large margin as customers start to search for products are services online. The central players will learn that they interact and engage with more customers online compared to when they focus more on an offline operation. This will make them want to reinforce their online availability so that they cover a bigger part of the real estate industry.
Also, there will be a drop in demand for physical office space as companies resort to working remotely. Most probably, this will be caused by the fact that some companies will try to reduce the cost of production by encouraging their employees to work remotely.
Where Are People Looking for Homes?
The pandemic might have transformed lives in many parts of the world. Notably, wealthy individuals are fleeing the cities to settle in the suburbs, unless they are looking for commercial property. Though they might be doing this for other reasons such as privacy, it is believed that the virus is one of the major contributing factors.
The effect is that real estate sales have remained constant in the suburbs as it goes down in major cities. However, this is not a trend that is observed in all countries. In some areas, it has been noticed that people still search for homes in the cities because that is where they work. The retired folks and self-employed persons are the ones mostly looking to spend their lives away from busy towns.
How long do skilled workers need to be able to buy a 60 m2 apartment?
The most risky place on UBS list seems to be Hong Kong, where you need to work as a skilled professional for between 18-22 years in order to be able to afford a 60 m2 (650 sqft) apartment. Here are some data for all major cities mentioned in UBS report for 2019:
1. Hong Kong – 18-22 years.
2. Paris – 13-18 years.
3. London – 12-16 years.
4. Singapore – 10-13 years.
5. Tokyo – 9-13 years.
6. Tel Aviv – 9-13 years.
7. New York – 10-12 years.
8. Münich –
9. Amsterdam –
10. Vancouver –
11. Moscow –
12. Sydney –
13. San Francisco
14. Zürich –
15. Geneva –
16. Frankfurt –
17. Stockholm –
18. Madrid –
19. Dubai –
20. Toronto –
21. Milan –
22. Los Angeles –
23. Boston –
24. Chicago –
The Future of Property Industry
There has been a growing disconnect between property owners and real estate agents. Most are not sure whether they can list the properties themselves or enlist the assistance of professional agents. Actually, this has been a major concern that will lead to a huge transformation of the property industry in the future.
Price is the other factor that is likely to change in the near future. Though the world is still trying to contain the effects of the virus, the situation will probably change after some years. For instance, in the next five years, it is believed that the price of homes in the UK will go up by at least 15.3%.
The world population will go up in the next five years, and this means that many individuals will be looking for homes to settle. Due to the high demand for property, sellers will take advantage of the situation and increase the price of their property. This is a trend that is likely to be observed in all parts of the market in the next 2-3 years.
Major Stocks in the Industry
Online trading is one of the best ways for realtors to make money, and bodies such as CBRE and ETF have what it takes to make this a possibility. These are companies focused on online trading, finances, and technology. Each of the three founders of Shorteslling.com has more than 15 years of working with short selling, finance, and software. Therefore, realtors can confidently entrust their hope on such bodies since they know how the industry operates.
Also, they have the right resources to enable seamless short selling experience. Therefore, by trading with them, you will not be wasting time or money, but enhancing the chances of gaining more profits from your sale.
In the future, the property market will increase by high margins, and possibly even the best margins. However, operators that are reluctant to adjust their operations might go down with the current situation. Therefore, it is important for them to realise the importance of leveraging available opportunities to survive hard times. Though the GDP might pick after the pandemic, the upward trajectory might not be rapid. It is advisable for real estate companies to come up with strategic operations to gain the trust and loyalty of their customers so that they retain them during and after the covid-19 pandemic. The demand for real estate products might pick very fast as people resume their jobs after the virus has been brought under control.