The Covid-19 pandemic has shifted the real estate industry in many ways, from price rises to adopting a greener future, here is our 2021 real estate forecast.
The housing market is known for being one of the most competitive markets within the Asia Pacific Region. Many individuals place great emphasis on their property assets, using them as a way to define their wealth and status. In China, 70% of millennials are already home owners and are seeking to invest in Australia, Hong Kong, and Singapore. Unlike other industries that have been negatively affected by the pandemic, the real estate market is growing exponentially. Here are 5 real estate trends to look out for in coming years.
1. Location Matters
The pandemic has shifted the way we work, and telecommuting and working from home has become the norm. This is why more homeowners are redesigning their guest rooms into formal office spaces and real estate agents’ selling points have become more home-office focused. Location has always been an important consideration when selecting a house, whether a buyer is prioritising proximity to family, a convenient commute, or shopping options. However, the work from home trend has also caused further emphasis on location, as more people are spending more time at home instead of going to the office.
2. Property Price Increases
Because people are not able to travel as frequently due to lockdowns, many are choosing to save their money to invest and purchase apartments. Especially with the current low interest rates, it is easier for individuals to buy or sell property. Because of this, Hong Kong is expecting property prices to rise in order to fit the current demand. House prices in Singapore have also risen in the first quarter, the private home market alone rising by 3.3%. One of the downsides to the housing boom is the lack of resources to meet this demand, especially with recent price increases, many construction sites are facing delays and are having trouble with procuring building materials.
3. Virtual Reality
With recent technological advances, prospective homeowners are able to take part in house tours from the comfort of their homes through virtual reality (VR). The China-based startup, 3vjia, is an online platform which offers users VR home experiences. It allows users to self-customise and decorate their homes to showcase different design concepts, and contains features such as a 3D rendering design system, and a purchasing option for these decoration pieces. Having virtual tours allows real estate agents to market their properties at a low cost, and they can bring buyers to “visit” many houses within a short period of time.
4. Green Buildings
With growing awareness of environmental issues, there have been more breakthroughs in solar energy, wind energy, and green building design. This has led investors and building companies to adapt and switch to more sustainable practices. According to the World Green Building Council, 38% of carbon emissions are generated through the building construction industry, with 60% generated by buildings in Hong Kong. This is why many Asian properties are seeking out sustainability-linked loans, hoping to create a more eco-friendly future.
Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-generating real estate. It is a great workable way to diversify an investment portfolio in a low-risk manner. Having a REIT allows investors to earn dividends from real estate investments without having to manage or buy any financial properties on their own. Especially within the Asia-Pacific region, the REIT asset class is known for its stable payout of dividends, making it more a supportive and on-demand investment form. Furthermore, with interest rates being lowered at the moment, experts are expecting that it will benefit this asset class, forecasting the current 5.1% payout to remain stable in the long term.