By Bjorn Biel M. Beltran, Special Features Writer
The impact of the coronavirus disease 2019 (COVID-19) pandemic has created lasting waves on the worldwide economy. Entire industries are still dealing with its effect on their operations. Most have moved online as a response to imposed global lockdowns and have had to quickly innovate according to a completely new digital and social landscape.
The real estate industry is in a similar position. Social distancing rules have caused significant disruptions in sales operations and consumer demands. With many businesses transitioning to virtual office meetings and working from home setups, commercial real estate has crumbled under the abrupt change in the way people work. Meanwhile, homebuyers are considering entirely new factors in their real estate purchases such as health and sanitation, ease of access to necessities like groceries, and properties that offer opportunities for a more meaningful work-life balance.
“Property insiders worldwide have noted an increased preference by homebuyers for properties that offer better opportunities for life-work balance now that most of the population are working, studying, or conducting business from home,” David L. Rafael, president and chief executive officer of AboitizLand, Inc., said in an e-mail.
“Families are placing a premium on health and wellness and it seems that Filipinos will be willing to cut back on other discretionary spending in favor of investing in a larger dwelling place. They also put more consideration into the number of amenities and open spaces in a development,” he added.
There is considerable pressure then for developers to continuously adapt to the rapid changes in the landscape. Mr. Rafael noted that real estate developers in the country have adapted fairly to the disruptions brought about by the pandemic, wherein all players in what was essentially a brick-and-mortar-oriented industry very quickly adopted virtual means of continuing operations such as online marketplaces, social media platforms, virtual tours, and online payment systems.
Global management consultancy firm McKinsey & Company pointed out that most real estate players around the world have been smart to begin with decisions that protect the safety and health of all employees, tenants, and other end users of space. Yet, it remains to be seen how such players can maneuver best in the post-pandemic world.
“The smartest will now also think about how the real estate landscape may be permanently changed in the future, and will alter their strategy. Those that succeed in strengthening their position through this crisis will go beyond just adapting: they will have taken bold actions that deepen relationships with their employees, investors, end users, and other stakeholders,” McKinsey noted in an article on their website.
In AboitizLand’s case, Mr. Rafael said that the company has made a quick pivot almost overnight to take their entire sales operation online, aiming to continue taking these steps forward by housing the entire customer homebuying journey in a single platform for its vecinos (Spanish for neighbors; a term coined by AboitizLand to mean its clients) “to make the process truly safe, convenient, and contactless for them.”
Technology is proving to be an invaluable tool for the industry in creating the blueprints for survival. Global professional services firm PricewaterhouseCoopers (PwC) notes in their Emerging Trends in Real Estate 2020 survey that some large players in the real estate industry are making significant investments in technology companies — in some cases through investment funds or accelerators — with the amount of investment activity rising quickly.
“With customers looking for digitally-enabled and mobile-friendly spaces, interviewees are introducing (or at least exploring) new applications across the technology spectrum. Much of the activities cited by interviewees revolve around smart home and smart building applications aimed at energy efficiency, typically by embedding IoT-powered sensors into their systems,” PwC said.
Now more than ever, developers are aware of the value of data and analytics to get a clearer picture of the property landscape. McKinsey notes that as the COVID-19 situation develops, the industry could see further redirection. For example, within commercial office space, the multi-year trend toward densification and open-plan layouts may reverse sharply, as public health officials may amend building codes to limit the risk of future pandemics, potentially affecting standards for HVAC (heating, ventilation, and air-conditioning), square footage per person, and amount of enclosed space.
“At the same time, just as baby boomers age into the sweet spot for independent and assisted living, fear of viral outbreaks like COVID-19 may prompt them to stay in their current homes longer. It is possible that demand for senior living assets could dampen, or the product could change altogether to meet new preferences for more physical space and more-intensive operational requirements. It is also possible that senior-living facilities could prove they are best able to handle viral outbreaks, accelerating demand,” McKinsey said.
Furthermore, the pandemic could have a massive influence in the consumer habits that affect demand for real estate assets like hospitality properties and short-term leases. The company pointed out that even a short moratorium on business travel could have lasting impact on the industry when alternatives such as video conferences prove sufficient or even preferable among consumers. Near-shoring of supply chains may further reduce demand for cross-border business travel, and consumers who are afraid of traveling overseas may shift leisure travel to local destinations.
“We have seen shifts in the preferences of property seekers that we believe are trends that will continue well into the future,” Mr. Rafael said.
“Since the start of the Enhanced Community Quarantine, the market has been looking for living spaces that are more spacious than the constricting confines of a condo unit. With the prevalence of online modes of work, business and study, choosing a home outside of the big megacities will continue to be a trend, as government infrastructure programs continue to support these cities’ decongestion, and promote economic progress in next-wave growth areas like Central Luzon and Batangas. AboitizLand’s communities, strategically located in these up-and-coming centers, offer options for property seekers looking to relocate there,” he added.
It is in response to such trends that AboitizLand’s master-planned communities come to follow new urbanism principles, which puts a premium on a wealth of amenities; walkability; and an abundance of open, green spaces.
“AboitizLand’s digital transformation accelerated very quickly as a consequence of the pandemic. AboitizLand opted to turn this disruption into an opportunity for innovation by fostering a digital culture that will translate to better service for its vecinos,” Mr. Rafael concluded.
The long-term ramifications of these disruptions are hard to predict. Yet as thanks to technology and the breadth of available behavioral data, real estate firms like AboitizLand can use analytics to generate fact-based insights and perspectives that can inform targeted decisions, rather than a one-action-fits-all-vecinos approach.
“Some landlords are now starting the process of thinking ahead to when the crisis is over. Strategic review processes aim to understand how real estate usage might change going forward,” McKinsey noted.
“While uncertainty currently reigns, by employing a range of creative personnel and using new methodologies — such as deep design interviews — business leaders may find new and more predictive insights,” it added.