The real estate sector is facing unprecedented mobility challenges due to the COVID-19 pandemic. Delays in deliveries, rising costs, labor shortages, and lack of materials are affecting almost every business and their related real estate. The flow of people between and within countries has always been a fundamental driver of the real estate sector, and the implications of reduced migration and behavioral changes will be determined by the duration of the virus, the innovations in health care, life and work that emerge, and global leadership. The safety of building occupants is now in the spotlight, from entering the building and vertical traffic to improving indoor air quality.
Density and affordability of housing, job opportunities, social services, and health care and recreational activities will be even more important in urban planning. In addition to the climate, the other major challenge facing commercial real estate is the supply chain crisis. The scarcity of materials and labor has hindered the development of new buildings and the remodeling of old buildings. This is especially difficult because developers and owners have been slow to adopt technologies such as comprehensive building analysis and management software. This reluctance to adopt valuable technology has contributed to creating supply restriction problems for many companies that are developing and operating commercial real estate. When businesses decide not to go to a certain area or location, homebuyers won't be willing either.
The collapse of infrastructure can also affect homeowners who already live in certain areas. Prospective homeowners make decisions about buying a home that largely depend on factors such as transportation and access to roads in that area. This will involve intelligent technology in the apartments and homes that homebuyers will be looking for and advanced technology in the real estate industry itself. In addition, the real estate industry will have to work with insurance companies to find solutions to maintain structures to withstand earthquakes and hurricanes. Virtual tours have been around for quite some time, but they will also continue to evolve in the future. Interest rates, rapidly changing user habits, shorter usage cycles and how to manage them are all issues that concern real estate professionals.
Affordable financing could help real estate managers increase and improve their property portfolios. Despite the potential challenges that the real estate sector will face in the coming years, this asset class also offers some potential advantages for investors.