PANDEMIC LIKELY TO IMPACT NEAR-TERM SUPPLY AND LONG-TERM DESIGN OF HOUSING
As the end of the COVID-19 global pandemic seems nowhere in sight, it has been increasingly difficult to count the total cost of the virus has had (or will continue to have on) our global economy.
Among the key industries plagued by uncertainty is the construction and development sector, where consumer insecurity has already had a sizeable impact. However, given the current state of the market, it is already possible to gauge the likely impact to the property market – some of it, at least.
According to a survey conducted by international property consultancy Knight Frank, which included the views of 160 global developers across 22 nations, almost six in 10 builders revealed that they have delayed projects in response to COVID-19. They explained that the disruption has caused a breakdown in supply chains, and this has now prompted a wholesale rethink of how and where people want to live.
Of those with delayed projects, four in 10 are now making changes to designs that were once considered complete.
Knight Frank associate Flora Harley said that while it was still early to confirm the lasting impact of the pandemic, it is clear that COVID-19 has accelerated pre-existing trends and prompted new ideas for current and future developments.
“Yet what cuts through the findings of the research is the importance of not overreacting to the immediate fallout from the crisis. There is little evidence pointing to the need to design for future lockdowns or specific meterage for social distancing,” Harley said.
While developers will likely temper their urge to radically reshape development designs initially, the Knight Frank survey confirmed a desire to consider potential pandemic-related changes.
These include, space for home offices in future houses. Three-quarters of developers said they were likely to consider advanced telecommunications and space for home offices to cater to an emerging trend of working from home – as more and more companies are encouraging this flexibility.
Furthermore, there is rising demand for healthier, green surroundings following the global lockdown at the onset of the pandemic. Developers (38% of the respondents) are now looking to provide facilities for bicycles to address a renewed appreciation for the outdoors, while only 17% are prioritising the availability of parking space.
Additionally, following the period of unprecedented movement restrictions, two in five developers said they would likely be more sensitive to the requirements of the domestic market, rather than look abroad for development opportunities.
Overall, 41% of developers said that they were looking to develop in a mix of locations, including second-homes and rural areas, while 45% said they would solely focus on cities.
One of the key changes that is likely to take hold soon is the increased use of virtual viewings as a sales and marketing tool. Almost two-thirds of the respondents see sales geared towards virtual offerings from now on. This enables a more inclusive sales process with buyers allowed to communicate directly with the developer, architects or designers via webinars or similar platforms.
“According to survey respondents, funding is the biggest barrier to global development, with just under a third citing it as their biggest concern. Some markets have seen a reduced number of lending facilities offered to developers,” said Harley, adding that this will impact the rate of new property projects coming into the market.
Other than funding, developers were also concerned about property taxation and regulation that might turn off buyers, planning and travel restrictions in the near term.
“For the future, two messages are clear,” said Dominic Heaton-Watson, associate director of International Residential Project Marketing for Knight Frank.
“For developers, COVID-19 has accelerated trends already underway in new build projects, whilst for purchasers it has ultimately confirmed that flexibility is key. Purchasers are seeking truly versatile living space that supports agile working, whilst allowing for the separation of home life to promote health and wellbeing,” he said.