While containment was announced on March 20 in New York State, new regulatory frameworks were urgently put in place to respond to the problems of professionals in the real estate market.
Real estate agents essential workers …
“It’s a small victory, since April 2, real estate agents have the status of essential workers, allowing us to be more free in the exercise of our profession even if it remains impossible to continue working normally and show the properties ”, says Christophe Bourreau, Associate Director BARNES At New York. In addition, the banks are calm and do not intend to restrict access to credit, as evidenced by the FED, which reduced its key rates to close to 0, thus paving the way for a slight drop in the rates charged by banks.
“It is essential to pursue a clear communication strategy, whether in the high-end real estate market or on news related to COVID-19. This allows us to show our customers that we are always there to support them in their projects, ”explains Christophe Bourreau.
… hooked on digital tools
The use of digital tools allows BARNES NY real estate agents to continue their activity. For example, “Virtual open houses” have been set up and allow the real estate agent to show a property directly via his iPhone to potential buyers. Video tours or 3D maps also exist and allow visitors to get a first opinion on a property visited remotely. The Governor authorized the organization of “virtual closings”, allowing accepted offers to materialize, via digital signature. Only suspensive clauses could allow a buyer to retract, “force majeure does not apply in the current situation”, adds Christophe Bourreau.
New home prices falling, business in sight for investors
Since 2016, the situation has been complicated in New York in the new real estate sector. With an offer much greater than demand and many apartments for sale, prices are regularly negotiated (-5 to -10%). “With the cessation of non-essential construction since March 31, all residential projects will fall behind schedule and arrive in an already saturated market. We can therefore expect sharp reductions in the price of new goods, ”Christophe Bourreau analyzes.
Regarding existing real estate, most sellers and buyers of primary homes are waiting to understand the evolution of the market, while buyers of second homes and investors look for the right opportunities with negotiations at the key given the uncertainty. of the economic situation.
“Globally, we have 50% fewer new mandates in March 2020 compared to March 2019 and 30% of all properties have been withdrawn from the market, but there are still 70%, which allows the real estate market New Yorkers to live, ”adds Christophe Bourreau. “Note that the New York market is very” tenant “(which represents 70% of the real estate market in Manhattan) and that federal financial aid and the State of New York allow tenants in difficulty to pay their rents. Therefore, the rental market should remain stable. “With a stable rental market and lower purchase prices, investors could take advantage of the situation and carry out their investment projects in the United States with a probable increase in profitability,” he concludes.
The commercial real estate market is slowing down
“Regarding the commercial real estate market, some sectors will emerge strengthened from the current crisis while others should suffer from the current situation and the effects of containment”, explains Miriam Driot, Consultant of BARNES New York.
Which sectors could benefit from the situation? Office real estate. Even if teleworking will become more present in companies, some of them do not wish, or even cannot, offer this unique solution. They will be looking for larger offices to improve the quality of life at work. The health sector : With the health crisis linked to COVID-19, the public authorities are realizing the importance of the sector and its limits. The industrial sector and logistics activities : Containment has reinforced the interest of e-commerce and logistics platforms and warehouses could come out the winners of this crisis. Local retail real estate (small traders) : the COVID-19 crisis should allow local businesses to stand out by attracting a population who had previously preferred to go to hypermarkets.
Which sectors should suffer from this crisis? Commercial real estate : Restaurants, bars, theaters, cinemas are the big losers from the current crisis. With the fears that will persist after leaving confinement, it is a safe bet that many will hesitate for a long time before going to these public places. Hotel industry : While the sector was in the midst of restructuring, it will be necessary to see how it will succeed in rebounding following this crisis.
“The COVID-19 crisis will have a strong impact on the habits and customs of New Yorkers and internationally. It is still too early to say how the post containment will translate, but the real estate market will have to adapt to new user demands, if it wishes to maintain its momentum, ”she concludes.
