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It has become apparent that this health crisis will lead to many changes in everyone’s behavior, and certain socioeconomic trends are beginning to become clearer. As a global real estate advisor and managing partner of a firm with a presence in over 90 cities, I always use a worldwide approach for our multicity and multiproject clients in order to make investments in the right location at the right time. It’s this experience that leads me to a vision of how the post-pandemic era will result in several socioeconomic changes. The following are trends we can expect to see in real estate in the coming months.
1. Defensive Investments
Most investors will be looking for a defensive wealth strategy by directing their investments toward safe havens, such as gold for more traditional investors, or bitcoin for the millennials. However, real estate is the No. 1 tangible investment and a safe haven for all, especially when financial markets and Forex are in an unprecedented state of volatility. Real estate professionals can, therefore, expect to receive numerous requests from highly liquid investors looking for the best opportunities to safeguard their wealth.
2. A Surge Of Divorces
An observable factor we saw in China that might also be also an indicator for the U.S. is the increase in the number of divorces following months of lockdown. If the same consequences take effect in the United States, there is no doubt that the real estate market will be boosted with the search for new housing and new properties for sale.
3. The New Definition Of Luxury
One trend I am certain of is that the new post-pandemic luxury feature will be space. After weeks or months of confinement, many people are now beginning to realize the importance of having a large living space, a true home office, outdoor space and amenities. Seeing firsthand what my home city has to offer, I believe Miami will be a big winner of this trend. The new awareness of the importance of quality of life, the return to essential core values and a renewed desire for open space will put our city in the spotlight for many looking to reconsider their lifestyle.
The ultra-centrality or proximity of the workplace will possibly lose its value per square foot because working from home will increasingly become a real norm and no longer a temporary step. The famous real estate adage “location, location, location” may lose some of its steam. Many employers and companies are realizing how working from home increases productivity in a way they never imagined. Thanks to technology, it is notably cost-effective, with less commuting time and more focus versus a presence in the office. If it works so well, why go back after the end of this health crisis? If working from somewhere specific is no longer a requirement, we can expect to see massive moves all over the world.
4. The New Buyer Equation: (Affordable Prime Real Estate + Quality of Life) X Tax Incentives
My opinion is that with the democratization of remote work, the key factors of space, quality of life and financial incentives in many cities will gain value and popularity.
In Europe, London and Paris have reached peak prices per square meter as compared to other European capitals such Madrid, Lisbon, Athens and Rome, which are a fraction of the price for comparable prime real estate. They also often offer a better quality of life and tax incentives or golden visas for international residents.
In the U.S., many New Yorkers have been leaving their city apartments for less-urban surrounding areas that are easily accessible by train, or even migrating south. It’s my observation that many of them are heading toward Miami as more and more companies have decided to make it their new home.
Indeed, Miami’s average price per square foot for prime real estate is 50%–60% lower than I’ve seen in urban cities such as New York or San Francisco, while offering opportunities to consequently reduce taxable income in the absence of city and state taxes. If it is possible to double the size of your property for the same price while moving from a dense and more polluted city to an economically developed beach city with cleaner air and more sunshine, who would hesitate to make that move? I’ve seen buyers from the Northeast make this choice on a daily basis over the last 18 months.
5. The Digitalization Of Showings
As physical showings are still forbidden in most properties and the fear of infection will not disappear overnight, we have to reimagine how showings can be done digitally both now and in the future. To adapt to these new constraints, we must accelerate the adoption of effective digital tools such as Matterport VR tours that give a true sense of space and volumes, plus self-directed tours for clients via Facetime and Zoom, so we can sell without clients having to step a foot inside. The future of real estate will reside in more transactions done remotely.
As times change, proximity to work will no longer be the main criteria because digitalization and working from home are becoming the new norm. The recent lockdown is a milestone in this economic era and the opportunity for many to center on essential needs when purchasing real estate. Although this pandemic has tragically impacted lives and the world, it could result in a healthy takeaway for society regarding what truly matters.