It’s evident that the real estate sector will change during and post-Covid19. In many ways! Comparing notes lately, a colleague for instance mentioned how he has been trying to move his stock of property.
He even offered generous price concessions. But no one jumped at it, he mentioned. I advised that markets behave so in uncertain environments. Most prospective buyers focus on sheer survival hoping that their cash reserves will last the period.
They are therefore unlikely to invest available cash on property, whatever the bargain. And this trend has been gradually slowing down the real estate sector lately.
This will be felt by those who had pending commercial and residential properties to move, along with those who held urban or rural land for sale.
The market will take time to recover post-Covid-19. Uptake will be sluggish as cash levels will be low, with prospective investors having eaten into their reserves. Others will have changed priorities. Many may want to first rebuild their cash reserves, before considering capital investments.
Moreover, the season has taught unexpected lessons. After long periods of working away, many companies may just have realized that they could do with less office space. Meetings, critical decisions and the cascading of operational instructions have been happening virtually.
The work-from-home call, which started off as a survival strategy, may have triggered unexpected trends for institutions that have hitherto embraced office-centered business models. In Kenya’s jam-strung cities like Nairobi and Mombasa, time saved and the freshness of working out-of-office will tempt.
This could see businesses scale down on their space needs, and subsequently influence decisions for new businesses hence triggering a net reduction in the demand for commercial space. Real estate groups within this niche, particularly in Nairobi’s central business district and its suburbs, will need to plan to accommodate this likely trend.
The Ministry of Land will be finding itself under pressure to scale-up e-transactions, now that customers know the consequences of unavoidable externally influenced shut-offs. Luckily, the Land ministry has lately fast-tracked the necessary enabling legislation. Practising land professionals in planning, surveying and conveyancing will be under pressure to tweak their business models too.
This cluster of professionals supports the construction industry and real estate. They move the planning, surveying and registration of property.
Most of them do business by collecting data from Survey of Kenya, lands and county offices for use in their planning and survey work. Conveyancing lawyers process client instructions for attention in land registries.
Surveyors and planners will no longer need to work from specific offices to oversee data collection and field work, provided that their field staff is able to collect and return equipment to some designated safe custody.
Technology also allows wide latitude for data processing and plotting. One needs not be restricted to specific spaces.
The delivery of documents between Lands, Survey and County planning offices will in future be done largely by email. With the anticipated e-transactions, lawyers too will no longer need to physically ply the land registries. So land professionals will gradually not require big offices, or any offices at all, and can greatly cut down on their operational costs.
The working-from-home also just revealed the vulnerability of relying on rental residential premises. With reduced or unpredictable monthly income, meeting monthly rent obligations became a nightmare for many. This has positive consequences for real estate. There will be a run for any affordable residential houses, be they one-off purchases or mortgage. There will be a run for vacant peri-urban plots and land on which to put up owner-occupied houses. This will happen for Nairobi and other major towns. Owner-occupied residential houses spell a big relief from monthly rental obligations should one be required to work-from-home for whatever reason. This provides a good opportunity for those with such houses, plots or land post-Covid19.