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The influence of Corona on the real estate industry

The ongoing corona crisis is hitting many branches of the economy hard. Public-intensive industries, such as the catering, hotel and event industries, are particularly hard hit, but also those that suffer from delivery failures due to the Covid19 restrictions.

What about in the real estate industry? What effects has the crisis had so far and what trends can most likely be expected in the near future?

Robin Wagner, May 11, 2021 

It is well known that the housing market reacts to changes with a certain time delay. Projects that are in the final phase of a long planning period or even already under construction cannot be stopped easily.

The corona crisis has been up to mischief for over a year, which is why there are some changes in the real estate market.

Lower demand due to a decrease in immigration

Due to the corona crisis, immigration to Switzerland in 2020 fell sharply compared to the previous year. The latest statistics from the State Secretariat for Migration show similarly low values ​​for the two months of January and February 2021.¹

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¹Source: Staatssekretatiat für Migration

Due to the falling immigration, the decline in the formation of new households will continue to increase. In addition to the lower immigration, the real estate market could also be weakened by the falling demand of the population already living in Switzerland. Future plans tend to be more cautious, so it can be assumed that young people, for example, who had planned to move out soon and rent or buy their own apartment, will increasingly postpone this project or abandon it altogether.

A falling demand with constant construction volume (ongoing construction projects are hardly stopped) will ultimately lead to increasing vacancies in rental apartments, condominiums and houses. In the future, apartment owners, administrators and marketers will be required to market their apartments professionally in order to be able to withstand the increasing competitive pressure and to avoid vacancies.

Fall in demand for commercial properties

The commercial properties are still hardest hit by the crisis. The main reason for this is the prevailing home office requirement. Every company that is able to employ its employees in the home office is encouraged to implement this. As a result, many companies’ investment plans relating to commercial real estate have burst at short notice.²

The main problem for commercial properties is the fact that a trend has already developed from it. Many companies and their employees have noticed through the crisis that working from home has some advantages. It can therefore be assumed that not a few companies will retain the option of remote work even after the crisis.

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²Source: HEV Schweiz

New demands on our home

The significant increase in the home office trend not only has an impact on the culture of companies but also means that the demands on the living situation of the population are changing. If you spend more time in your own four walls, the need for a high quality of living automatically increases. Anyone who works in the home office will promptly want to be able to differentiate work from private life. An extra room that can be used as an office is also very helpful.

The home office trend, which was intensified by the Corona crisis, could also have an impact on future residential construction. The demand for apartments with additional rooms or apartments with flexibly usable, partitionable rooms that can be converted into offices will definitely have increased in recent months. Ascending trend.

«Rurbanisation» Trend

Another megatrend that is being accelerated by the Corona crisis is what is known as “rurbanization”.

The term is made up of the two words “rural”, which translated from English means “rural”, and “urbanization”. It describes the mixing of rural and urban life. The focus is on people’s need to take advantage of the amenities of city life (wide range, good infrastructure, certain anonymity, etc.) as well as those of rural life (lots of undeveloped green spaces, nature, space, etc.).

But what does all of this have to do with the Corona crisis?
And again – keyword “home office”: the ability to work from home means that people are no longer tied to their place of work. They can settle where they like without having to take into account the distance to the place of work. People are therefore increasingly moving to more rural areas and are reluctant to forego the advantages of urban life in their free time.

The demands on the rural areas are increasing due to the voices of the high-earning newcomers from the city (who pay high taxes!). This in turn could have an impact on future housing and house construction in the country.

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You can find more about the megatrend “Rurbanization” in the blog of our partner newhome.ch: newhome.ch Blog

Conclusion – in the real estate market everything depends on demand. This is in constant change, which is influenced by a large number of factors and events. Understanding this demand and recognizing people’s changing needs with regard to “living” early on is what makes it possible to create the right offer.

Recognize trends before your competition