How will Covid-19 change the real estate market?


The latest analyses of the Engel & Völkers experts
Engel & Völkers Licence Partner covid 19 real estate

Property prices in the corona crisis - recession in the property market?

The pandemic caused by COVID-19 has a massive impact on financial markets and the economy worldwide. Many investors, property owners, potential home buyers and landlords are therefore asking themselves: Is the corona crisis also affecting the real estate market? Are property prices rising or falling due to the coronavirus? We will get to the bottom of these and similar questions in the following. Due to the current market dynamics we will regularly update the contents of this page dedicated to COVID-19 and real estate


1. Are property prices falling as a result of the corona crisis?

According to current information, no unusual developments have been noted yet. Kai Enders, member of the board of the Engel & Völkers AG, makes a differentiated market evaluation and estimates the situation as follows: The Corona pandemic leads at short notice to shifts of purchase conclusions, on a long-term basis it will, however not reduce the housing demand. For many years, the demand for living space has exceeded the scarce supply of real estate in many cities and regions. This fundamental trend will not change significantly even in the current situation, as the reasons for the excess demand will continue to exist". 


The strong demand for residential space in recent years is due to population growth and the continuing influx into metropolitan regions and medium-sized cities. This has led to a significant increase in the prices of properties for sale and rent. New construction activities were also unable to meet the high demand. Kai Enders explains: "The demand for residential space will not decrease even in the face of the corona crisis - because people will always be in need to have a roof over their heads.


The reason why the coronavirus crisis does not seem to have had much impact on property prices at the moment is relatively simple: real estate does not lose its attractiveness for investors in these times. A home can still be considered a stable investment in times of crises.


2. Property price development for residential real estate due to the corona crisis

The strong demand for residential space in recent years is due to population growth and the continuing influx into metropolitan regions and medium-sized cities. This has led to a significant increase in the prices of properties for sale and rent. New construction activities were also unable to meet the high demand. Kai Enders explains: "The demand for residential space will not decrease even in the face of the corona crisis - because people will always be in need to have a roof over their heads. 


It is not yet foreseeable that property prices will fall as a result of the Corona crisis, given the current market situation. However, it is only possible to estimate how prices and the number of sales transactions resulting from COVID-19 will develop in the second or third quarter of this year. At present, however, it appears that the property market will remain stable in terms of prices despite the corona crisis, particularly in the major cities. Especially in times of crisis, real estate is once again proving to be a safe investment.



3. Property price development for commercial real estate due to the corona crisis

Commercial real estate prices are also currently still stable. However, the individual sectors have been affected by the pandemic to varying degrees. While the hotel, catering and retail sectors are having a harder time in the corona crisis, the demand for storage space and warehouses could grow. In view of the long supply chains through several countries, the tendency of manufacturing companies to set up their own warehouses could in fact increase, thereby boosting the market.

Normalisation for the office property segment

By contrast, a temporary downturn in the market for office properties could lead to a normalisation. So far, demand has been extremely high at many locations and the market has been correspondingly tense. Under certain circumstances, a growing vacancy rate could now lead to renewed movement on the market. However, like the real estate market as a whole, the office segment reacts to macroeconomic changes only with a time lag. What could happen in the short term: It is possible that fewer rental agreements, especially long-term rental agreements, will be concluded for the time being.

COVID-19 and commercial real estate: A first assessment

Dirk Beller, Head of Commercial DACHCz at Engel & Völkers, draws a first conclusion: "We are currently in a crisis. The most important thing at present is that everyone adheres to the recommended protective measures and that the number of people who fall ill remains within the limits of what our health system can respond to. Then the economy can also recover and the market for commercial real estate in every sector can pick up again. Overall, investing in real estate remains a safe investment.


4. Should I wait with the purchase/sale of my property?

Understandably, some owners and potential buyers are currently uncertain whether a property investment makes sense. From our point of view, however, we can overcome these concerns: In view of the largely unchanged market situation at present, there is no economic reason for investors and owners not to buy or sell a property. No change can be observed at present in the low interest rate level either. For investors and potential buyers, the attractiveness of real estate is therefore unbroken. In addition, thanks to the modern tools from Engel & Völkers, nothing stands in the way of marketing in times of the corona crisis. 


The fact that there are currently fewer transactions, explains Engel & Völkers board member Kai Enders as follows: "The contact bans and curfews imposed by the German government as well as officially ordered closures of shops are hampering the customary process of brokering objects". Personal visits can still be carried out under strict safety conditions. However, with many bank branch closures, it is currently difficult for investors to obtain a loan. However, Kai Enders is confident: "We are currently registering a number of postponements, but only a few cancellations. We assume that once the current situation has been overcome, business will continue at the current level and even catch-up effects will be seen". 


Thanks to the modern tools from Engel & Völkers, nothing stands in the way of marketing even in times of the corona crisis. In the following section, you will learn how a property sale currently works:



5. How property sales work in the corona crisis?

The crisis caused by COVID-19 raises the question for many real estate owners whether a property sale can be carried out safely at the present time. In fact, Engel & Völkers has the most modern, digital tools at its disposal to handle house sales even when personal inspection of a property is no longer possible:

COVID-19 and real estate: Virtual viewings with Matterport 

Physical viewings of properties have become almost impossible due to the corona crisis. Understandably, neither seller nor buyer want to face the risk of infection. But thanks to our cooperation partner Matterport, this is no longer an obstacle to selling a house. With the help of a modern  360° camera , a virtual 3D image of the property is created, which then allows you to view the property as if you were there - all from the comfort of your own home. For this purpose, a single shoot of the property needs to be completed by one of our real estate agents before you approve it for online upload. Discover for yourself what such a virtual property tour can look like:

Perfect overview thanks to impressive drone recordings

In addition to the virtual tours, we also offer you the opportunity to present aerial views of the property when marketing with Engel & Völkers. After all, it is not only the features of the property that are decisive for buyers, but also its location. Thanks to our cooperation partner FairFleet, it is possible for us to market your property using impressive drone recordings. With the help of such photographs, you can also provide potential buyers with a perfect overview of the location and draw attention to nearby hotspots such as schools, shopping centres and infrastructures.

Even in times of COVID-19, we at Engel & Völkers are committed to making the marketing of your real estate a success or helping you find your new home. We would gladly inform you about all our digital options that can help you. We look forward to hearing from you.

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Engel & Völkers
Licence Partner covid 19 real estate
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