The residential sector is proving surprisingly resilient during the pandemic. Most global real estate markets are experiencing minimal price drops and high demand. In some, such as the US and Brazil, new construction is experiencing an uptick. A recent report examines new builds in depth offering insight in the current situation for global development.
Surveying global development
To take the temperature on residential new builds, Knight Frank consulted 160 developers across the globe. The survey asked about their current development situation, changes in design and how the pandemic has changed the sales process.
The Global Development Report 2020 includes some interesting revelations and comes to a perhaps surprising conclusion. According to many of the developers interviewed, the key to the current situation is “not overreacting” and showing flexibility.
To hold or not to hold development
One of the key questions asked in the survey was whether developers were delaying new launches. 57% of those interviewed said they were while 37% said it was business as usual.
Demand for new builds under construction prior to the pandemic has proved to be very resilient. Knight Frank data found that offers accepted in London in August reached the highest monthly total ever.
New-build properties in Brazil are experiencing similar trends. Sales of new units in Sao Paulo went up by 45.5% in July. In Fortaleza, the capital of the northeast state of Ceará, sales rose by 43.4% in the same month compared to June and by 21% in the year.
To change or not to change design
The survey also investigated whether developers were adapting design to the pandemic lifestyle. In this area, developers were equally divided – 44% said they were while 44% said they were making no changes.
However, the shifts in lifestyle after lockdown appear to be here to stay. 77% of developers said they would be including advanced technology in their construction with 75% adding a home office.
“An important element of this new way of working is the merging of work and personal life,” said Todd Nisbet from Crown Resorts. “The boundaries between the two are beginning to cross,” he added.
More outside space
Having access to private outdoor space in the form of a terrace, yard or garden became a priority for many people at the start of lockdown. Since then, many residential markets have seen a rise in demand for single-family homes with gardens and apartments with sizeable balconies or terraces.
In the Knight Frank survey, 54% of developers said they would be incorporating more outdoor space into their design. This includes gardens and reconfiguring terraces.
“I think we will see a shift to more flexible, well-designed terrace space,” said Maria Morris, Head of Residential in the Middle East. “The value of having useable outside space will certainly be boosted.”
More virtual sales
The survey also asked developers if their sales process has changed during the pandemic. Travel restrictions have limited access to property viewings and developers and estate agents across the globe have had to adapt.
Virtual viewings are the new normal in 63% of global development according to the Report. They include walkthroughs, videos and 3D photography. Future trends could focus on webinars with the developers, architects and designers themselves to provide a more personal and inclusive buying experience.
Stay calm and be flexible
The main conclusions of the report suggest that the key to global development moving forward lies in not overreacting and being flexible. Several of the developers interviewed expressed the opinion that this is a temporary state of affairs, not permanent.
One believes that social distancing is unlikely to become a fixed feature of life. Another claims that superior standards of cleaning will be more important than no-touch features.
The report concludes therefore that “fundamentally it is all about not overreacting to the current circumstances”. Developers should take a look at trends that are “already emerging and here to stay versus those which may be of the moment only”. Ultimately, they need to be flexible.
(Source: Knight Frank)
