The COVID-19 pandemic totally restructured the dynamics of the global real estate market, spurring the change in buyer behavior, preferences of the properties, and investment tactics. The real estate sector is indicating signals of its recovery from the deep-impacting scenario of the post-COVID era; however, the market has been evolving with the new priorities, new technologies, and the changing concept of work and lifestyle. Below is a deep dive of the most significant trends moving the real estate industry in a post-COVID world.
1. Remote Working and Hybrid Models
- The trend of remote work in the pandemic has left permanent mark on preferences in terms of residential real estate. Nowadays, several professionals are in search of homes that have specific workspaces, high-speed internet, and residential areas that do not have much noise.
- Per Upwork survey, 22% of the U.S. workforce will work remotely in 2025, this is two times of the non-pandemic level.
- City dwellers who are homebuyers are moving to the suburbs and outlying small towns where they can take up bigger homes with yards.
2. Demand Shift out to the Suburban and Tier 2/3 Cities
- Urban flight became a massive trend during the COVID-19, and the trend prevails within the post-pandemic setting. Once the digital infrastructure is improved, people do not feel attached to big cities.
- India: There is an increased real estate investment in Tier 2 cities such as Jaipur, Lucknow or Coimbatore.
- US: And around cities such as Austin, Nashville, and Raleigh, the suburban counties reported a 10-15% jump in the home prices, due to high demand.
3. Boom in Warehousing and Logistics Spaces
- E-commerce saw a meteoric rise during the pandemic and it is here to stay. This has led to increased demand for warehousing and logistics spaces, particularly in/around metros.
- According to reports by CBRE, global e-commerce transaction was estimated to reach $6,3 trillion by 2024, thus raising demand for the last-mile delivery hubs significantly.
- In India, warehousing space leasing increased more than 45% YoY in FY23.
Also read: Top 5 Most Expensive Cities in India to Buy Property
4. Digitization of Real Estate Transactions
- Technology adoption in real estate has been on the fast lane after COVID. Customers are now not afraid to engage in virtual tours and digital signing of documents as well as AI-powered platforms for property discovery.
- Virtual tours and drone-view of properties are now a status quo.
- Blockchain is being investigated for safe and transparent property transactions.
- PropTech platforms are delivering services such as 3D walkthrough, digital home staging, as well as online legal verification.
5. Focus on Health and Sustainability
- Homebuyers and investors are more health-conscious post-COVID, and they are interested in eco-friendly/wellness-oriented spaces for habitation.
- Touchless entry systems
- HEPA air filtration
- Green buildings with better ventilation
- Community gardens and open-air balconies
- Deloitte report reveals that, 79% of homebuyers prefer sustainable housing and green-certified buildings have average occupancy rate of 7% higher.
6. Co-living and Flexible Leasing Models
- Given that the younger workforce wants flexibility and affordability, demand for co-living spaces and flexible leasing models have experienced a boom.
- Rent to own systems and subscription based rental housing is catching on.
7. Commercial Real Estate: A Mixed Recovery
- Office spaces: The remote and hybrid work arrangements have reduced demand. However, some companies are renovating office space for collaboration – rather than desks for individuals.
- Retail spaces: Malls and brick-and-mortar retail plunged, but is being redeemed with the shift to experiential retail.
- Flex workspaces: Coworking spaces are thriving once more, and particularly within the cities.
8. Affordable Housing and Government Initiatives
- In places such as India, there is a continuous increase in the demand for low-cost housing. The government is also promoting schemes, which will encourage home ownership.
- Under PMAY (Pradhan Mantri Awas Yojana) the amount of houses which the Indian government has authorized over 1.2 crore houses till the beginning of 2024.
- It is still competitive in many countries as regards interest in mortgage, sustaining first-time buyers.
Conclusion
The post-COVID real estate market is characterized by digital transformation, the changing preferences of consumers, the renewed focus on health, and flexibility. Some of the segments such as warehousing and suburban housing have boomed while others such as traditional office spaces are still finding their feet in the new normal. In order to thrive in this constantly shifting terrain, investors, buyers and developers must have nimbleness and awareness. By identifying such upcoming trends and embracing the new requirements from consumers and companies, all the stakeholders within the real estate ecosystem can succeed in this redefined post-pandemic world.
Written by Promita Ghosal
