During these unprecedented times all areas and sectors of the economy are making great efforts to understand what the post Covid scenario will be. Unfortunately, at the moment, with both mathematical models and macro-financial analyzes and social principles, it is still difficult to give a precise and accurate answer.
In order to assess and estimate long-term investments considering the new situation, it is now important and necessary to understand how long this emergency will last.
What can we expect from the real estate sector?
Two months of lockdown have changed the way we conceive the house, we have become aware of our available spaces, of what is superfluous and what is now important.
Therefore, riguarding residential buildings, larger and better organized apartments, where you can spend and enjoy much more time than before, will be sought.
Among the different requests: an outdoor space, a private or shared garden, a terrace, a space dedicated to smart working and some room for an exercise bike.
Home working for a group of workers will become a new way of working, we will no longer search for housing necessaraly close to the office, but for decentralized ones but with greater living spaces.
An open space or a very bright high floor could increase the value of the property by 10%. The presence of optical fiber will also be key.
Regarding the leisure facilities and activities (gyms, restaurants, …) and entertainment areas (cinemas, theaters, …), it will probably be necessary to totally rethink these spaces and areas, these sectors’ costs will rise and revenues will decrease due to the reduction of customers who will not be aloud to simultaneously share the same spaces as they did before Covid.
Regarding warehouses and industrial buildings, the demand in this sector could grow following the request of space for storage and distribution of goods. This is a consequence of the growing phenomenon of on-line commerce which is consolidating at a fast pace.
What are the price expectations?
Milan has been hit but, at the moment, we expect that it will be the first Italian city to restart. The prestigious properties and estates in the city center will continue to keep their value, while for the other types of residences, the quality of life offered by the provincial cities could be rediscovered and there might be a possibility that these cities will return to repopulate and the related markets will recover as a consequence.
The orientation and tendencies of the market, in addition to the changing needs, will mainly depend on the duration of the economic crisis.
Rates are low, but it will be necessary to understand how stringent banks will be in granting credit lines considering that the recession carries a greater risk of insolvencies.
15th May 2020
by Francesca Lorusso