Owning a home remains the single most important investment in most people’s lives. The novel coronavirus pandemic will impact all players in the real estate chain from tenant, landlord, lender, service provider, broker, insurer, investor, etc.
A moratorium in the construction industry has been placed in many parts of the world with new protocols requiring tool sanitization, hand-washing stations, staggered work schedules and mandatory face covering.
This article will cover the real estate markets that Iranian diaspora tend to invest abroad, including Turkey, UAE, Canada, USA, etc.
As unemployment has surged globally due to the pandemic, it has reduced consumer appetite for investment in real estate. As a result the market, which saw a global surge over the past two decades, has receded for the first time after a long period.
In a BNN Bloomberg April 22 report that COVID-19 stings Toronto housing as sales sink 69 percent in early April. Owning a home remains the largest single investment for most Canadians.
Toronto is Canada’s heart of business and economic activity and it is the country’s largest housing market which went into a deep freeze as COVID-19 decimated homebuyer demand.
New listings slumped 63.7 percent in April from the same time last year. Prices were relatively steady in April as average house priced slipped 1.5 percent to CAD$819,665. Meanwhile, prices fell most sharply in the detached property market, falling an average 4.6 percent to $990,543.
In May, Canada Mortgage and Housing Corporation (CMHC) warned home prices could decline as much as 18 percent if the Canadian economy doesn’t recover this year from the impact of economic downturn due to COVID-19 pandemic.
Analysts believe that the housing market is unlikely to recover while unemployment in Canada is hovering at 13 percent currently. CMHC says housing prices won’t have full recovery (pre-pandemic levels) until end of 2022.
The national housing agency announced recently it would be tightening the rules for insured mortgages – those with less than a 20 percent down payment – in an effort to protect new buyers and taxpayers.
Meanwhile, Ontario provincial government has declared that it will halt commercial evictions until pandemic crisis is over.
CMHC said average housing prices could fall anywhere from nine to 18 percent in is forecast, and as much as 25 percent in oil-producing regions in Canada, including three provinces of Alberta, Saskatchewan and Newfoundland and Labrador.
In 2015 Albert produced 79.2 percent of Canada’s oil, Saskatchewan 13.5 percent, and province of Newfoundland and Labrador 4.4 percent.
U.S. jobless claims in 9-week total to 38.6 million amid layoffs fueled by coronavirus pandemic, amid 14.7 percent jobless rate that is the highest since the Great Depression.
Home sales have plunged to 9-year low, mortgage delinquencies set to soar as unemployment is on the rise. Home sales plunged 17.8 percent in April. With the lock-down occurring from mid-March, and given the shakiness from the stock market in February that hurt pending contracts, so now we are seeing an almost 20 percent decline in existing homes sales, reports bitcoin.com.
As COVID-19 will reshape U.S. entire real estate industry, how people reengineer their careers and lifestyles to adapt to the new normal, many will reconsider how, when and where they define home, writes Forbes.
One pattern could be that the Americans will live in one home for longer impacting real estate markets by increasing the demand for features that facilitate multi-generational living.
Financing might change. In 2018, the average homebuyer spent 13.3 years in one home.
Other trends that have emerged include:
–Homebuyers may depend on their real estate agent more;
–Buyers might block towards the suburbs, with areas like New York City were among the hardest hit by COVID-19, before the pandemic, many people preferred high-rise condos. Due to shared plumbing and ventilation systems of high-rise buildings may transmit viruses at faster and higher rates.
–A second house to get away from major cities to safer and less populated areas.
Commercial rent is going unpaid and prospect of more job losses means fewer people are thinking about buying homes.
In April, UK house prices fell for third month in a row as COVID-19 plunged real estate market by 0.5 percent. The average price of a home in UK dropped by 0.2 percent over the month and stands at 237,808 pounds, reports The Guardian.
As the UK went into lockdown in March, buyers and sellers were told to delay their moves and suspend new viewings and many deals were put on hold until the market was unlocked on 12 May.
As Iranian nationals continue buying houses in Turkey despite the pandemic as Turkey ranks 14th among the world’s most advantageous real estate markets for foreigners. Foreign residential sales in Turkey significantly increased following the reciprocity law launched in 2013, after which foreign sales surpassed $6 billion, breathing new life into the sector. The sales of residential properties to foreigners reached 45,483 units last year.
According to the Turkish Statistical Institute data, the number of houses sold to foreigners jumped 11 percent and reached 11,068 in the January-March period, despite a short-term stagnation in the housing market due to the coronavirus pandemic.
Selman Ozgun, chairman of Antalya-based Helmann Yapi, was quoted that a foreigner can buy real estate for about 400,000 euros ($440,000) in countries such as Portugal and Spain, while this figure is around 120,000 euros in Istanbul.
Following Iranians and Iraqis and Russians were the third nation purchasing homes in Turkey, followed by Afghans, Palestinians and Yemenis, report Daily Sabah.
In order to encourage investment in real estate Turkey reduced the limits for foreigners to acquire Turkish citizenship. Foreigners owning a minimum $250,000, instead of the previous limit of $1 million, can now acquire Turkish citizenship.
Persian Gulf Arab region:
By the end of 2019, the UAE’s real estate market outlook was looking very positive, and then COVID-19 arrived. The immediate focus was five-year event Expo2020 which was postponed to 2021 due to the pandemic and many companies, not just in the property market, are looking at their own business models and seeking to course correct.
Banks have lower interest rates and developers have repackaged their property offers to include longer-term payment plans.
More than 3.5 million foreign workers may lose their jobs due to the pandemic and oil crisis, reports Asia Times, as expat flight to follow migrant exodus from the Persian Gulf Arab states.
In Dubai, the Middle East’s business hub, 70 percent of companies could go bankrupt within six months, reports Asia Times, as unemployment across the region hovering around 13 percent. Local citizens, overwhelmingly employed by the public sector, will be largely spared.
Saudi Arabia’s construction giant Binladin Group has cut thousands of jobs. Flag carriers Emirates and Qatar Airways will reportedly let go up to 40,000 employees.
Foreign employees, from construction workers to skilled professionals, lack safety net provided to domestic employees. Population loss due to unemployment could exceed 3.5 million people, Scot Livermore, the Chief Economist at Oxford Economics Middle East, estimated in May.
In Dubai, where less than one inhabitant in 10 is an Emirati citizen, the population could shrink by a minimum ten percent, a former director of Dubai’s Department of Finance tweeted.
The International Monetary Fund forecasts non-oil activity in the region to contract by 4.3 percent this year, reversing the 2.3 percent growth in had previously projected.