10 Real Estate Trends Upon The Wake Of The Covid-19 In Jordan
While this doesn't mean "all bets are off," it's clear that priorities have changed for both residential and commercial real estate professionals since the arrival of COVID-19.
Forbes made a bold statement. “Now that hundreds of millions of people have gotten a new taste of how important “home” actually is—as a safe haven, a de facto schoolhouse, an impromptu remote office, and a forced, familial psychological petri dish—the spaces we live in, and more importantly what we demand of them, stand to look profoundly different in the post-coronavirus world.”
Let us look at trends that may be spawned by COVID-19 and the impact it caused in the Jordanian real estate market:
- Technology is taking over
Yes, you read that right. Technology has become a necessity during the corona virus world. From school closures to business shutdowns, technology has made it easy to connect virtually while maintaining social distancing and staying safe. Now more than ever, companies seek smart office environments and ensure all safety measures are set to keep up with the new world we live in
- Commercial spaces have been brutally impacted.
Commercial real estate from hotels, restaurants to retail spaces have been brutally impacted, with a domino effect as these tenants struggle to pay rent or, in the case of large retail chains, attempt to re-negotiate the terms of their leases due to the decline in traffic to brick-and-mortar stores as consumers shop safely from home.
- Bigger gaps in construction supply chain
Gaps in the construction supply chain are getting bigger due to business closures, social distancing measures, and increased competition for transportation and delivery services. This is having an impact on new construction and renovations for the residential and commercial properties.
- Interest Rate Reduction
The central bank of Jordan lowered its benchmark interest rate by 100 bps to 2.50% on March 10. Majority of Jordanian banks are also helping citizens by expanding their loans and lowering the interest rate in some of the cases.
- Jordanian government is helping
The Jordanian government announced recently that it is reducing sale taxes and property fees in addition to exemptions on fines until December 31, 2020 to help citizens get though the unfortunate events the country is going through.
- Expatriates are coming back home and staying home!
We can all agree that the year 2020 was an unfortunate year. However, it was the worst on expats and students studying abroad. As a result of the ongoing pandemic, expats were kept away from their families or let go from their jobs. Therefore, the return of more than 20,000 Jordanians caused a high demand on real estate market in Jordan, which created excellent opportunities for real estate investors in the market
- Homeowner’s needs vastly differ in the post-coronavirus world
The house feels smaller when you are quarantined … doesn’t it? Homeowners start to revise their home plans in the post-coronavirus world. The two-month quarantine period implemented by the Jordanian government made citizens realize the things they lack or would like to add to their homes. This created a new interest for homeowners to shop for bigger properties with balconies, views or a garden. This realization has also stirred up new opportunities for real estate developers and investors.
- Stability of Property prices
The reason why the coronavirus crisis does not seem to have had much impact on property prices at the moment is relatively simple: real estate does not lose its attractiveness for investors in these times. A home can still be considered a stable investment in times of crises. Experts on the field had predicted for property price rates to go up by midyear 2020 then stabilize with minor or no increase until the end of 2020. There has been more than 52 new investment projects between March and June during the Covid-19 pandemic as confirmed by Dr.Khalid AlWazani, head of Jordan investment commission (JIC). Dr.Mohammad AlEses, Minister of Finance, has also assured that Jordan has taken all required financial measures and policies so it can maintain its financial stability.
- Higher unemployment rates
The unemployment rate in Jordan increased to 23 percent in the second quarter of 2020 from 19.2 percent from last year due to the pandemic. It is the highest jobless rate since at least 2005. The unemployment rate rose for both males (21.5 percent from 17.1 percent) and females (28.6 percent from 27.2 percent).
- Owners & occupiers will face varying impacts
During the pandemic, owners with long term lease agreements will have less impact than owners with short term lease agreements, depending on tenant liquidity capacity. On the other hand, occupiers will be focused on liquidity needs and operating effectively with a reduced or remote workforce. Occupier’s short-term impact may be offset by tax relief or other government incentives during this period.
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