The impact of the coronavirus is just as psychological as it is physical. In fact, while individuals with weak immune systems are more at risk from physical consequences, no one is spared when it comes to psychological effects. A state of panic now dominates peoples’ minds and they are afraid of an uncertain future. This has resulted in a reclusive mentality where a majority of the people are withdrawing —and rightfully so —from all sorts of economic activity, including real estate.
The global property market is on the verge of an unexpected downturn as a consequence of this global disengagement. And even though the same panic is yet to fully grip the minds of the people of Bangladesh, a closer look will reveal that it is already impacting the local real estate market to some extent.
One of the major precautionary measures against Covid-19 is social distancing — a concept that is, like the virus itself, quite novel to the people of this country. However, as more and more people are becoming aware of what it is and what they can do during this trying time to protect themselves, they are limiting outside visits. As such, a core function of the real estate scene — viewing properties — is being impeded.
For the first time in a long while, there is a chance that the number of people engaging in real estate activities might slow down as tenants and buyers practice social distancing.A better understanding of the consequences can be gained by looking at the real estate markets of places like South Korea and Italy, where the recent thriving housing sector has come to a stand-still.
The fear of the coronavirus is also gripping the minds of property owners as well.The number of property transactions has dwindled all over the world due to the threat of infection. In the US, the owners are only permitting a limited number of viewers and that too when people of the house are somewhere else. Many property owners are pulling their property off the market altogether in fear, resulting in an inventory shortage.
The situation in Bangladesh has not deteriorated so far yet, but the owners are less inclined than before to permit property viewers. However, this does not affect the primary property market though as such properties are newly constructed and do not have any occupants. This bodes well for the real estate market of Bangladesh since, unlike the US market, a big portion of the market segment is made up of newly constructed properties.
The rental landscape, on the other hand,will face a monumental challenge since almost the entire market is made up of secondary properties. The pre-existing norm for this landscape is to find a future tenant before the current tenant moves out. But this becomes troublesome in this current landscape as the fear of contamination may make tenants hesitant to invite outsiders or take on the difficult task of moving somewhere else — both of which may leave them vulnerable to the virus.
But this sudden onset of the virus puts them in a problematic situation where derailing from an existing commitment is not an option.Both landlords and tenants need to provide an eviction notice month(s) in advance so as to ensure there is ample time for the other party to find a replacement. And due to the current mindset of the people, finding either a new tenant or a new home can be difficult, to say the least.
Furthermore, the unexpected appearance of the coronavirus could not have come at a worse time for the real estate sector of the country,as the market gained a lot of momentum in recent times thanks to the introduction of a number of regulation changes.The measures taken to get more people engaged in real estate were coming into effect — the introduction of “zero equity” loans, higher debt-ceilings, a lower interest rate, and massive infrastructure developments — all motivating people to invest in the real estate sector of the country. But now the fear of the virus may curtail all that and demotivate the people for taking that step.
However, the sliver of hope for the housing sector of Bangladesh lies in the fact that neither the desire of the people nor the beneficial regulations are going to disappear anytime soon. Unless the presence of the virus is a prolonged one, the real estate market will, undoubtedly, bounce back as it has before, and that is what experts around the world estimate for their markets as well. Once the pandemic subsides, people will begin to invest in property again with maybe the added benefit of lower prices — as can be seen in other major markets in various nations.
Panic, coupled with utter unpreparedness and unfamiliarity, seems to be the cause of the current mental state of the people. The world is probably heading toward a recession, but the real estate market, especially that of Bangladesh, is sturdier than others. The upward trajectory of the global real estate industry may slow down for some time, but few predict that will be the case in the near future.