Effects of the Coronavirus Pandemic in the Real Estate Industry in the Philippines?
There are very few people across the world whose lives are not being affected to a lesser or greater degree by the coronavirus pandemic. It is already very clear that the global economy will be hit severely. Central Banks are clearing their armouries of their financial weapons in a coordinated global defence of the free market economy.
In the Philippines it appears that the only business sectors that will escape unscathed, and even possibly benefit, are the fast food, home delivery services and video streaming such as Netflix. For the real estate industry, the downside effects are immediate and significant.
The real estate sector that has been driving the boom in residential real estate are the integrated condominium developments. They are part of master-planned communities that integrate the live-work-play-shop lifestyle, providing accommodation for the growing aspirational middle class and also a huge number of foreign workers who provide substantial impetus to the fast-growing Philippines’ economy.
The development companies employ thousands of agents across the country who are deployed mainly in shopping malls to solicit the interest of potential buyers. With shopping mall operations being severely curtailed and the encouragement of social distancing this particular route to market developments has been abruptly cut off. The country now effectively in lock-down means that interested buyers are not even able to view properties for sale.
Facebook dominance has a cost…
In many countries, the obvious alternative would be to increase marketing via the Internet. However, in the Philippines whilst Facebook usage is the highest in the world, broad Internet usage is relatively very low. I believe this is because the lack of competition in the Philippines telecoms market meant that Facebook was able to secure exclusive connectivity with the telecoms duopoly. This connectivity was to Facebook alone and did not enable access to the wider Internet. In fact, it is quite amazing how many very large companies do not even have websites, but they do have Facebook pages!
So, whilst Facebook postings will take up some of the slack it simply won’t be enough. The growing middle class do generally now enjoy full Internet access on their smartphones and so those realtors who already have websites are likely to reap the benefit.
Notwithstanding the lockdown, potential buyers are reluctant to visit properties to view for fear of picking-up an infection. Not such a problem for the bigger developers who have websites with high quality photographs and videos. However, for the resale market this presents a bigger challenge.
Customer focussed innovation helps…
I have noted that some innovative realtors are offering FaceTime viewings of property, where their agents visit the property on behalf of interested buyers and stream the video in real-time to them. Whilst this is a good compromise it still cannot beat getting a feel of a property in an in-person viewing. Nevertheless, it will be interesting to see if this concept becomes established once the coronavirus is tamed.
Taking this to another level are high-tech solutions readily available in the west, but not so common in the Philippines, such as 360° virtual tours and 3D models. The cost issue is probably a barrier to take-up of this tech by a large number of agents.
On the street, House and Home is pioneering a mix of old and new introducing traditional ‘For Sale’ boards with QR codes. Linking direct to the property & agent’s details on the website at HouseAndHome.ph – Scan the QR code in the image below for an example. This is an efficient way for buyers to get all the property details immediately on seeing a board and then contacting the Agent only if they wish to view.
At the time of writing no one anywhere in the world has a clue as to how long the threat of coronavirus will hang over us. Will it just be a few months or could it drag-on into next year? Consequently, the necessity for imaginative solutions to mitigate the effects are needed. Innovation driven by necessity may well be the deciding factor in the future success or otherwise of those in the real estate industry.
I’d be interested to hear from you how this pandemic is affecting real estate in your area and how you are adapting to the challenge.