What does this mean for the Real Estate Industry?
For many, COVID-19 has taken a big hit in workplace conditions. Over the last 18 months, COVID-regulated measures have increasingly made an impact in organization policies and implementing new workplace arrangements.
Seeing, the rise in the number of cases following December 2021, COVID-19 has created a spike in precautionary measures, and Work from Home (“WFH”) set-ups are now finding their way back into the corporate sector.
As more people are spending their time at home, investing more in their living spaces has become a dominant factor. Due to WFH policies slowly taking over, getting a place close to the office, is lower on the list of priorities. Ultimately, this has also resulted in a few prominent trends in the market.
Global Trends
As market value drops, investors across the world are now more susceptible to investing in properties that offer lower than market value rates. Usually, these are investments, as the trend follows, most prominent when made in ‘Gateway Cities’.
Gateway cities in simple terms were up and coming cities that were once thought to be the ticket to The American Dream. These cities were urban metro areas, that had a strong economic foundation for the region. With more organizations adopting WFH policies, the importance of living in urban areas by the cityside has slowly subsided and gateway cities act as an excellent opportunity for investors who want to attract remote workers with properties for below market value rates.
Distressed Properties
Similar to investing in gateway cities, distressed properties in simple terms are properties on the brink of undergoing foreclosure. In current market conditions, homeowners and lenders are offering rates 10 – 15% below the market value (Zawya, 2021). Investors now stand a good chance at acquiring mid-market properties more easily.
Despite the involved drawbacks such as repairs and investments involved to bring it to the desired state, there are numerous pro’s one can consider. For starters, distressed properties worldwide, including the middle east, can be acquired at mortgage and interest rates far lower than usual. (Click here, for more insights.) Ultimately, for parties that have a strong financial grip, this investment will very likely possess a high potential creating an opportunity to sell it for a profit in the future.
Middle East Insights
Following the dip in the market cycle in 2020, the real estate market in the middle east has been on a progressive road to recovery. Luckily, the property market has the tourism industry to thank for. As of September and October 2021, footfall in hotels, restaurants and shopping malls witnessed an increase of nearly 60% (Bloomberg, 2021). The EXPO 2020, although delayed, has helped the market gain momentum again. Considering that foreign ex-pats make up 90% of Dubai’s population, it is highly unlikely that WFH policies will create a huge impact on its continued growth.
The Bottom Line
It is no doubt that the incidence of advanced technology has resulted in breaking through cultural and technological barriers. People’s way of operating and living their lives are shifting. However, this does not necessarily imply doom for the real estate industry as a whole. This presents an opportunity for the industry to adapt and evolve to meet the needs of people and the market.
With that being said, no matter what the season, we at West Gate, are always here for you. Our well-versed group of experts are now, here to present you with the best practices to navigate through your investment strategies within the real estate sector. For more information, inquires and support, contact us here.