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Impact of Coronavirus on real estate

Yeshi Dema / Khmer Times Share:
A new development in Phnom Penh. Supplied

Property watchers have long noticed that weekends, at this time of the year, are a prime times for people seeking to buy or rent homes, but this year it’s different.

That’s because of COVID-19 has reared its ugly head, knocking the traditional  real estate sector on its head.

Fewer people are on the streets and even looking on the internet, putting the brakes on the industry.

“We deal with sales, apartment rental and property management,”  said Aoyama, chief executive officer and president of Life Design Partners. “I have been running this business for eight years now. This is unknown territory for us. I haven’t been down this road and I don’t know what to expect.”

Sales of apartments have fallen and have inflicted a severe blow because most potential customers are foreigners. With lockdown being imposed in many countries and travel being banned, there are hardly any customers who have shown any interest in buying property. Life Design Partners alone has 70 percent loss in sales in the face of the viral pandemic.

“We are doing a little better in the rental and property management section but sales have hit almost zero because most customers are not keen on purchasing until the COVID-19 coast is clear,” Hideaki said.

While some landlords are reducing rents to keep tenants, some of the tenants are moving out to cheaper places, making it desperate times for both tenants and landlords. Some tenants are even asking for a 50 percent discount having been hit by pay cuts, forcing the hands of property owners reliant on a steady cash flow.

“We have downsized the number of our employees and cut the rent of our office and focused on using this downtime to build a business system to be in a better shape after the viral pandemic ends. We are diversifying our business model and focusing on clients and not the products. We are now going to strategise our greater focus on non-Chinese Asean investors such as Hongkong, Singapore and Japan,” said Paul Ellender, Manager of Freer Properties.

Ellender further stated that there is a 20 percent drop in search traffic of his properties, both for rental and sales of apartments. Now with schools being closed, foreign rentals have decreased which once used to flow along with the high season and teaching calendar.

While the sale of property has dropped in the face of the global pandemic, some of the customers are eyeing the value of US dollars very carefully because the exchange
rate between them and Australian dollars is good but the reverse exchange rate is not so good.

An important thing to remember is that property, unlike other investments, is a long-term purchase. Experts agree that owning the family home is a great way to ensure long-term financial security and, while markets can dip in the short term, property values will generally increase over the long term. Some of the potential customers have been waiting for the downturn so that they can buy while some of the owners are desperate for a panic sale.

“Don’t panic sell”, said Ellender. “It is always best to buy in a downturn and sell in an upturn. Now is a good time to review your portfolio.”

“Therefore, searches such as apartments for rent, apartments for sale, and simply apartments have dropped as other things take their place on everyone’s priority list. While where we live is no doubt extremely important, for the time being we must adjust to the current situation and focus on things that have an impact on our immediate future,” Ellender added.

“We were going to see more and more of these vacation rentals coming up on the market,”  said Hideaki. “Some listings have been cancelled, some contracts have fallen down and some are still being written.”

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