Covid-19 Impact: Loss for Metropolitan Properties Could Be Gain for Suburban Ones

  • Jul 31, 2020 BST
  • Team Kalkine
Covid-19 Impact: Loss for Metropolitan Properties Could Be Gain for Suburban Ones

Summary

  • The convenience of working from home has now changed businesses outlook on hiring high-end properties in metropolitans and moving to suburbs.
  • While this change in outlook towards metropolitan properties is driving down their rentals, it is also driving up rentals of commercial space in suburban areas
  • The latest trend could be beneficial for the country’s commercial real estate sector, as more and more money will be pumped into the development of commercial real estate in suburban areas

The coronavirus pandemic is changing the world in more ways than one. For instance, people are now warier to travel via public transport, going to crowded places and living in congested urban areas. While this change in attitude has got a lot to do with the higher quality of life that one may enjoy in a suburban setting, there is also the factor of work from home facilities contributing to it. Because of the pandemic, a lot of companies pushed for work from home arrangements in a big way to keep working through the lockdown and protect their businesses from making huge losses or going bankrupt. However, this arrangement is also making more and more people realise that they do not need to live in large cities, and work for the same companies, at the same level of productivity and earn as much while enjoying the life of a suburb.

The COVID- 19 pandemic and change in attitude towards living in metropolis

The COVID- 19 pandemics like the previous epidemics of SARS, MERS and the Spanish flu is spread through close human contact when respiratory droplets of one person get into the respiratory system of another person and carry the disease with it. From the time the pandemic first broke out in China, it was able to travel far and wide in a very short period of time via people who would travel across continents via air. The spread was so fast that health authorities were caught off guard and could not control it. Most of the people around the world though have heard about pandemics but have seldom experienced anything like it in their lives.  The environment of scare and helplessness would certainly have an impact on the psychology of people, and they would want to their comfortable stage of lives that they had before the pandemic hit.

The sudden rush of people to look for suburban places, which are less crowded is a result of that state of mind. While metropolis has always attracted people, who have been looking for a vocation, but as cities become crowded, things like air quality, water quality, other forms of pollution and things that would cause anxiety also to increase exponentially. Thus, any opportunity to retain one's vocation while not having to live in a metropolis is something very attractive and many people would prefer to do it. In the present time when the threat of the pandemic is so high, and the work from home facilities are so advanced and so easy as well as cheap to fix, the number of people opting for suburban life is also increasing significantly.

The strong recovery rate witnessed in the housing sector post lockdown.

Post opening of the lockdown the housing construction sector has witnessed the fastest turnaround with the IHS Markit/ CIPS PMI for the month of June reporting that the industry has gone into an expansion zone in the last two months. Property dealer’s website Zoopla has also reported an increased number of hits on their website and inquiries of people who want to move out of cities like London to a suburban locality. The above strong recovery rate in the sector is prompting many to believe that the high growth rate in this sector will stimulate growth in other sectors as a cascading effect.

The technology and the benefits of the work from home facility

One of the major reasons that much of the economic damage to the world economy was mitigated despite the overwhelmingly fast spread of the viral infection was the internet. A significant amount of commerce happens over the internet these days, which did not exist during the Spanish flu or during any other pandemic that has hit the human race. Through internet not only have people been able to get their provisions home delivered with utmost safety precautions but they have also been able to render their services to the employers and keep business going as usual while not leaving the comforts of their households.

Internet technology has in the pretext of this pandemic showed us a new way to live and work and also given us a glimpse of how the future might look like. Better quality life, low per capita carbon emission, low per capita energy consumption are some of the implied benefits that work from home facility brings from us which in the long run will be extremely fruitful in improving the quality of life and productivity of the entire human race.   

Conclusion

People and investments in real estate moving out of metropolitan areas could be a beneficial move for the United Kingdom. While overpriced real estate, on the one hand, does not bring much benefit to many people, creating of more urban centres will reduce the overall load on the urban infrastructure of the country resulting in an improved quality of life for all. As for the commercial space rental industry, the purported exodus might be loss-making, but in the mid, to long term, it will lead to massive value creation in the industry. However, the trends observed so far in this regard are too small to be of significance, and a reversal of this may be witnessed in the coming few months when the threat of the pandemic subsides.

 

 


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