How the property development industry in Sydney has resisted the impacts of COVID-19
The COVID-19 pandemic has affected almost every part of the Australian economy, including the property development industry in Sydney. However, like many strong industries in our economy, the property development industry has managed to resist many of the impacts of the ongoing public health crisis. Instead of just adapting, we have learned to persevere and instead of just survive, we have thrived during this time. How have we managed to do this? Creative management and of course, recommendations by industry bodies and the government. Everyone has learned to accommodate the new policies put in place by federal and state governments. In this article, we’ll discuss some of the challenges facing the property developments and how we’ve managed to overcome them.
What challenges have residential property developments in Sydney faced?
Many of the impacts on the property development industry have been due to the necessary response required to combat the spread of COVID-19. Others can be attributed to the devastating effects on other industry sectors. Here are some of the issues facing the property development industry.
- Reduced profits and income
- Close to 1 million Australians have lost their jobs or, had their pay reduced significantly as a result of decreased sales and profits. This impacts the industry because reduced overall household or personal income impacts the affordability of rent. Many landlords have reported lowered rent requests from residential tenants. Additionally, landlords will have to reduce leases in proportion to the reduction in a commercial tenant’s business sales/profits.
- Social distancing
- The mandatory 1.5m social distancing rule has made construction, open houses and working in our office difficult to navigate.
- Low rental demand and high competition
- Governments around the world have cracked down on short-stay options for Airbnb. This has prompted Airbnb to offer long-term options, rivalling that of tradition rentals in Australia with cheaper alternatives, thus driving down the prices of rent.
- Supply chain interruptions
- As factories in China and other parts of the world have had to close and stop their manufacturing due to COVID-19, construction material orders have been backlogged, stalling the construction of some developments.
- Banned open house inspections
- A ban on open house inspections by the government severely crippled the chances of home sales and new rental agreements.
How has the property development industry adapted?
To accommodate the string of changes and developments due to the COVID-19 pandemic, Cite Group and the industry at large have had to come up with innovative solutions to unprecedented challenges. Additionally, many of the government’s policies have proven to be beneficial to the property market and as a result, have helped the industry to buffer some of the potential damage. Here are some of the adaptations made by our company and the industry as a whole.
Social distancing on construction sites
The Australian Government classified construction as an “essential service” meaning that during the pandemic period, construction work did not halt. However, to keep employees safe, social distancing on construction sites has been carefully practised. Even though construction can carry on, it is important to protect employees and ensure that they are not hurt by this virus. On a purely work level, maintaining social distancing on sites ensures that the construction labour force of Australia remains strong, consistent and resilient during these times.
Virtual home inspections
The NSW Government banned home inspections to prevent too many people being in an uncontrolled environment. While understandable, this ban has significantly impacted the rental property market. As a temporary improvisation, virtual home inspections were started to allow persons to “inspect” a potential space without the need for being physically present. Property agents began live streaming to potential buyers and renters as a substitute for the traditional home or apartment inspection.
Australia’s central bank has reduced interest rates to a record low in order to stimulate the economy. As many Australians have been suffering from reduced incomes, increased expenses and job losses, low-interest rates come as a welcomed relief. Low-interest rates make it easy and cheap to borrow the money needed for major purchases in life such as a home. Therefore, prospective homeowners who may be on the fence about purchasing properties due to a reduced income or job loss may now be more inclined to do so with a low-interest rate. This, in turn, drives property values up as the demand grows.
Digital, where possible
Internally, Cite Groups understands the importance of maintaining social distancing policies within our workplace. In addition to maintaining strict hygiene and sanitation standards, like most companies in Sydney, we held digital meetings and worked remotely when possible.
Rethinking the future of our properties
It is undeniable that COVID-19 will change our ways of living forever, and not just in an economic sense. People have changed their behaviours and are now, more aware of hygiene and the contagiousness of viruses. What does this mean for our properties?
- Closed-door offices and elevators may become a thing of the past. As confined spaces like the elevator and office are now avoided due to the lack of space and potential transfer of viruses, our team is preparing for a shift in the wants and needs of the Australian market.
- More home offices may be in demand. The recent lockdown and ongoing work from home policies have caused many companies to come to the realisation that working remotely is in fact possible for many employees. Therefore we are preparing for demand in small commercial office spaces and home offices.
Every member of our team at Cite Group has had a hand in successfully seeing our company through these hard times. While it is not over, our team’s dedication to their jobs, expert knowledge of the property markets in different suburbs of Sydney and commitment to safety in the workplace makes us confident that our company will continuously thrive during this time. We expect that Australia’s property development industry and the overall economy will strongly bounce back in the near future.
For now, our goal is to focus on the acquisition of new projects and the development of our buildings. We intend to keep our business as normal as possible and will support our team and clients wherever possible. If you’d like to learn more about joint venture opportunities or any of our projects, contact us at email@example.com. Keep up to date with us as we share more property news and insights.