Investing in real estate during the pandemic
Before, the scenario was much simpler. Much simpler! And now? There is uncertainty. Tightening your belt or watching how much you spend. Fear in the eyes on the one hand and the need to make money on the other. These are the words that describe the real estate market and the work of real estate agencies during the coronavirus pandemic.
There are several studies available on the Internet about the impact of lockdown on our business. We, however, wanted to create a transparent guide and description of the situation before, during and after the epidemic. Why? So that every entrepreneur and private investor knows if investing in real estate is profitable at the moment.
The housing market before “all this”
The overall mood of Q2 and Q3 2019 was more than positive. Development projects spread across Poland, smaller, local house building initiatives boosted the economy.
At some stage in their lives, many entrepreneurs decide to invest in property. What kind of activities do we have in mind?
- Building in order to sell,
- House flipping (buying a house/flat in a poor condition, renovating it and selling),
- Buying for rent in large metropolitan areas
Banks provided loans. Companies and individuals were able to obtain financing to buy property. In short:
Business was booming
And suddenly – boom! Lockdown, downturn and crash.
So how is it that the epidemic has affected the real estate market? To understand this, it is necessary to take into account all the factors affecting the industry.
- Demand/supply (to what extent and how many people want to buy, sell or rent),
- Granting of loans and their costs,
- Current market supply (availability and amount of properties available for purchase and rental),
- Rental demand for residential and commercial
This brings us to the crux of the matter. Due to the epidemic, a lot of companies have started to work in the “home office” mode, remotely. Unfortunately, many companies had to close their premises permanently. They simply moved online. The e-commerce industry celebrated new records in March and April. But at the same time, demand for offices and flats decreased. The number of landlords also declined as many people gave up renting due to uncertainty. In universities, the online education phase has started, so students have given up renting.
All this, of course, did not last a day, a week or two weeks. Unlike the financial markets, which react to changes as quickly as a kitten to the rustling of a packet of its favourite food…
Therefore, the results were only visible after a long time, after several months. But some common points of these transformations can be established.
So what has changed?
There are three key changes:
- The focus is now on larger flats for rent or own use (due to the nature of remote work),
- The number of purchase/sale transactions has decreased. People are less willing to spend money because the risk of further economic tightening is on the horizon,
- The costs of loans are lower because the National Bank of Poland has announced an interest rate cut but, at the same time, they are granted much less frequently.
So, how to invest during the pandemic?
If you remember doing orienteering during your school days, then investing in real estate nowadays can be compared to it. You need specific shoes, a good memory so you don’t get lost, and, of course, you have to be physically fit. Because it will enable you to get ahead of the other players.
Investing in real estate today is very similar. You are interested in two things, i.e.:
- How not to lose (half of success), and (above all)
- How to make money thanks to your investment.
To achieve these two goals, you can use the services of specialist companies, such as, for example, HomeBrand real estate agency based in Wrocław.
At its heart is a team built by experienced investors who have spent their professional lives practicing the acquisition of unprofitable properties and then turning them into profitable investments instead of sitting behind their desks.
When it comes to our partners’ money, we are very motivated to multiply it as if it was our own.