A report from real estate company McGrath centred around the question ‘Has COVID-19 changed real estate forever?’ has concluded the pandemic will certainly cause sectors of the population to adjust both their way of thinking and their behaviour in a permanent way.
The virus has prompted many Australians to reassess their lives and make new choices for the future.
“Traditionally, millions of people have chosen to live in areas that didn’t necessarily deliver their ideal lifestyle but did provide convenience,” explained John McGrath, founder and executive director of McGrath.
“If you had to work in the CBD or a commercial hub and didn’t want to spend hours a day commuting, you had to find a place that was a reasonable drive or on a good public transport route. Then, you’d hope to save enough money to one day buy a getaway; or wait years until retirement to eventually live where you really wanted to.
“Moving forward, many people will cease their daily commute and… live in our ideal lifestyle location and enjoy an effective work routine without the stress-inducing travel.
“Put simply, many people will never return to a full-time centralised work environment again. At least, not five days a week. From a lifestyle perspective, this creates a host of benefits and new opportunities.”
As such, what holding a full-time job will look like into the future will almost surely differ from the pre-pandemic norm.
“Employers have realised there is now an alternative to housing their entire workforce under one roof. Not only does it work well, it can save everyone (company and staff) loads of money and lead to a happier workforce,” said McGrath.
Yet despite this fundamental shift, the executive director does not expect commercial property to become a relic of the past.
“Prime CBD locations will always attract good quality tenants, so there will be more than enough people to fill those sought-after floors. Plus, with COVID-19 likely to increase the acceptable space per team member from 8-10 square metres to possibly 12-15 square metres, there will be a balancing effect,” McGrath said.
“Retail space was already undergoing a huge shift courtesy of online retailing growing so rapidly and lockdown exacerbated it.
“Some commercial rents will be heavily impacted and perhaps their bruised owners will seek an alternative use for their spaces, including recycling to residential.”
McGrath was firm in his belief the doomsayers predicting a material re-adjustment in home values off the back of the pandemic are dramatic and off-base.
“I think there’s every chance that a small, short term correction might land for six to 12 months – something in the order of 5%,” he conceded.
“But the most in-demand markets that offer people what they want are about to take off again.
“With interest rates approaching zero and many owners having deleveraged in the past few years, I envisage increases in well-located prime residential real estate in major cities and regional lifestyle areas - that is, anywhere near surf, waterways or lots of trees within 90 minutes of the big East Coast cities.”