Is your Rental Business Affected by COVID-19? Here's our answer to 6 Key Questions.
As a restriction on real estate activities (especially leasing) will be lifted soon, it would be opportune to address some of the burning questions property investors may have about their rental business. We will try to answer the questions based on how industry experts have analyzed it and how our team sees the actual activities in the ground.
We believed one of the burning questions most investors will have right now are:
1. Will rent go down?
This crisis will affect rent. The primary driver for the price is demand and supply. If post Enhanced Community Quarantine (ECQ) easing, the travel ban is not lifted, we expect rates to fall. Imagine, once leasing resumes, there will be a rush for landlords, agents, and brokers to compete for tenants, considering there were units vacated by tenants during the ECQ. Moreover, with many people trying to recover financially, they are more likely to look for value for money units to rent.
What we recommend investors to do at this time is:
If your unit is vacant, be nimble with your rate. The fact is everyone is affected and are trying to recover financially, so be flexible.
If your lease is due to expire, consider keeping the same rate or give a discount (if needed) to keep your existing tenant.
At this time, it is better to lose a little in rent than no rent at all.
2. Will there be changes or slowdown in the demand?
As we observed, there is still demand. Even in the middle of this crisis, Sonders Property Management still receive inquiries. So the demand is still there. Moreover, what we expect that demand for units that are in proximity to the workplace will likely see demand from locals who previously do not rent out. These are those who commute daily to work. With the risk of acquiring the virus is higher in crowded public transport, they will consider moving to the city. However, as we mentioned earlier, most people are recovering financially, so the budget will be a factor they will consider.
3. Will preference for property change?
We do not expect a big change in the preference of a tenant. We believe it will still likely be the same pre-crisis. However, if the potential tenant is working for a company that may require them to work from home and require a stable internet, they might look for units with high-speed internet or good signal.
4. My unit is currently vacant, how soon can it be rented out after the restrictions are lifted?
Unfortunately, there are still uncertain things we are yet to know once the restriction is lifted. How fast the market can bounce back is dependent on many factors such as the readiness of building management to accept viewing and move-in, recovery of businesses, and safety concerns, considering the threat of the virus still lures. The key thing is to prepare. A month ago, Sonders has started a promotion, Reserve now, Pay Later.
This was in preparation for the easing of restriction. Understanding that most will have a tighter budget, we are offering an easy payment scheme for potential tenants. Head over to our facebook page to learn more about this promotion.
5. Will the Real Estate Industry slow down?
Industry analysts and experts agree that, yes, the industry will be affected but will not be as bad as other countries. The country still has a strong growth potential. Though the GDP growth forecast is slashed from 5.9% to 3.9% according to Oxford Economics, experts believe the Philippines will still be stronger. Homes are real necessities, which meant there is a real demand, considering the huge backlog in some segments.
According to Leechiu Property Consultants, despite the potential threats, these can serve as a potential opportunity.
You can read more on what the experts say by checking the following reports:
Lobien Realty Group says Philippines Real Estate could still finish strong post COVID-19
Will the Philippines Property Sector continue to grow? With David Leechiu
6. Is it a good time to invest now?
We believe there is no better time to invest in property than during this period. As reported by the Business Inquirer, Residential condominium prices are likely to fall by 15 %- 20% this year. This is good news! Last year, prices have been increasing ever so rapidly due to the high demand. This crisis has allowed us to be in equal footing and opportunity for those you are looking to invest in.
Impact of COVID-19 on prices.Prices will be “a bit soft but it’s going to be temporary, according to Jose R. Soberano III, chairman, president, and CEO of Cebu Landmasters Inc.
We do strongly believe post COVID-19, the industry will be able to recover as it has always been in the past. There are a lot of unknown and uncertainty right now but the Philippines' fundamentals are still strong and room for growth is still huge. Comparing with the other countries, the Philippine Central Bank still have a lot of bullets to use.
In summary, adaptability is key to make sure your investments continue to work for you. As Jack Ma said, "Today is hard, tomorrow will be worse, but the day after tomorrow will be sunshine."
For questions or inquiries, please email firstname.lastname@example.org or visit our website www.sonders.com.ph