by Homy Invest
Major factors
Currently, the economy is going into a progressive recession due to the Pandemic which accelerated the process to be on early 2020 rather than its forth quarter where there are some major factors are affecting the realestate market specifically as follows:
- Budgets cuts and limits
- Employees terminations and salaries cuts
- SMEs are struggling and many are closing
- Large Companies are not investing and limiting their expansions
- Landlords and developers are just maintaining what they have in-hand
Properties Rent Contracts
- Many tenants will ask for rent cut at contract renewal time
- Struggling tenants will ask to terminate the current contract to search for a lower rent
- Tenants who lost their jobs will be unable to pay the rent, and might go legal to terminate the contract
- Landlord will face difficulties to find a tenant with demanded price once a property is vacant
- unaffected Tenants will search for a smaller properties with lower rent and limit the contract to 3 months, and 6 months
- Many tenants will request a new contract clause that they can terminate the contract at any time without paying the remaining rent checks
- The fear of a new pandemic or a new wave of COVID-19 will put more pressure on government to place new clauses related to force majeure
- Disputes will increase gradually between tenants and landlords as we are going back to normal life
Properties Sales Contracts
- Struggled Buyers will delay the installment or even cancel the deal to sell as soon as possible
- Other buyers will stop any new deals demanding discounted prices to match market prediction of rescission
- Selling new properties with lowered prices will be extremely difficult due to high economical uncertainty
- A new clauses related to economic rescission or prices drops or a new pandemic have to be placed in the contracts to lower the risk on the buyers
- Realestate bubbles will burst in many countries on global scale and that may cause another financial crisis internationally
- Investors and landlords will revise their plans to maintain lower profit margins at the end of their developments
- Developers who were developing economical middle class properties, they are going to have a high demand from investors due to low prices
- Investors money will be directed to online technology, businesses, and delivery-transportation-carriers businesses, factories rather than ordinary realestate
In brief, investors and developers need to implement serious changes on the way they do business bare in mind the extreme slow recovery of economy currently; otherwise their losses are going to be progressive day by day like a snowball…
