The latest wave of increase in the incidence of COVID-19 in Europe and the necessary protective and preventative measures which have been implemented by each country has led to an ensuing negative economic ripple-effect, that could be set to affect the real estate market. In recent years developers did not need to work to attract customers, due to the already high levels of demand, the end of last year saw the completion of 207,000 new apartments – a record high. Further to this the mild European winter also played into the hands of general contractors. The culmination of this came in the form of the high average asking price for new apartments in Warsaw, at over 2,600 EURO per sqm in the month of February.
There is a long chain of companies associated with the housing market, which includes developers, construction firms, real estate agencies, financial institutions such as banks or lenders as well freight companies and materials manufacturers, and they are all vital to the economy. In recent weeks changes that have occurred as a result of the Coronavirus epidemic created a new group of clients in the real estate market. Core PR agency has been providing sales support for the largest developers and real estate agencies for over two decades. When a decade ago we saw a downturn, we curiously witnessed a situation where several buyers fought and chased the same property. We are now beginning to see the signs of that same process once more.
The virus is changing the housing market
In the current market situation, companies with well-prepared digital procedures and online offers will prosper. Many firms are only now beginning to modify it, preparing a complete internet transaction model, including elements showing real estate.
We are also observing increased expenditure on e-marketing activities. On the primary market (new housing) we would not expect a drop in prices, just as in several Asian markets, where demand was so high that after a period of virtually total stagnation in sales in February, the market seems to have already revived strongly.
In Poland, the consumer crisis will translate more significantly as a reducing in the number of potential buyers. The previously high demand which in practice has often provided several competing buyers for the same property will now be significantly reduced and developers may now have to enter uncharted territory and begin fighting for their buyers. But what must be noted is that historically in uncertain times, the real estate market and particularly land sales have proven to be safe havens. There is already a clear increase in interest in offers and purchases. An alternate option is for developers to reduce supply, by delaying the completion of new developments.
The expected increase in new opportunities will most likely appear on the secondary market (furnished properties) where we will be persuaded by the apparent opportunity available to respond to our current situation. This transitional period may result in a real-life reduction in transactional values.
Consumers move further to the internet
Consumers are now online. On average the process of acquiring real estate in Poland lasts between 4 to 6 months – but currently due to several varying factors (fear of leaving home, closed offices and courts as well as imposed quarantines) we have been observing a change in consumer behaviour towards online activity. Buyers now peruse the online offering ads they have far more free time in today’s climate – similar to what had occurred in many Asian market as where sales offices and real estate agencies were virtually closed for a month.
It is important to reiterate that currently companies with a well-prepared online presence
Will emerge victorious = with smaller apartments of around 50 sqm for sale, many are refining digital procedures, even preparing complete online transaction materials including virtual real estate tours. We are observing and experiencing increased traffic and expenditure in advertising activities due to these factors.
New game new rules
In the coming months we will observe limited demand and a further polarization of changed in consumer behaviour. Customers who urgently need to composite housing transactions will be more likely to view cheaper options or different locations because their uncertain economic situation may lead them to refrain from any major purchase commitments and spend their income on necessities instead.
In recent times we have seen an increase in new tools and novel solutions in order to allow sellers to present buyers with the most attractive Offerings. It would also be advisable to spend this time of limited offline activity to refine, collect and verify a complete database for a selection of properties which you can readily return to once normal activities resume. These are only a range of the new communication channels which have recently opened up.
Author: Adam Białas, manager at Core PR / journalist. For over two decades, he has been effective in the area of PR and e-marketing. Has many years of experience in campaigns for the real estate sector, and building B2B and B2C brand image. Core PR has serviced over 600 campaigns and crisis activities. Specializes in the financial and development sector. The agency carried out activities for the largest developers and real estate agencies.