The global real estate market is slowly starting to recover from the pandemic. The Covid-19 has inevitably left its mark in the industry. What challenges does it face and what new opportunities are there?
National governments have taken various measures to stop the spread of the virus, causing real estate activity to decline. However, the market should recover from the shock as the decline is not due to its weakness but to external factors. Overall, the market is expected to grow from approximately US $ 2.687 billion in 2020 to over US $ 2.774 billion in 2021.
Some markets are rebounding faster, others will take a little longer to reach pre-pandemic figures, as vaccination programs differ from country to country. Experts believe that growth will accelerate in the second half of the year due to pent-up demand.
So far, global non-residential property rental activity has remained relatively slow as most people still work remotely. The first quarter of 2021 showed a decrease in leased volumes of 31% compared to the same quarter in 2020, but rental activity in China has already returned to pre-pandemic levels, and the United States, the United Kingdom and Germany are expected to reach that level later this year. Australia has also shown signs of improvement. India still seems to be holding back.
In 2020, multiple market restrictions and supply chain disruptions resulted in delays in the delivery of many construction projects. In most cases, work has now resumed, and in 2021 the number of completed projects is expected to increase by 41% from 2020, the highest level of deliveries since 2008.
Office life again
After working remotely for over a year now, people seem to want to get back to the pre-pandemic working system. According to CBRE, employees can find their work from home productive, but they still want to return to the office, as it gives them the opportunity to create a healthier work-life balance, bond with co-workers personally and have a comfortable working environment.
It is clear that the role of modern office spaces is changing. These are places where employees communicate, work in groups and in networks. In the future, they should organize educational events and career development activities. Employees will be less attached to an office, but it will still play an important role in supporting corporate culture and cooperation.
These new needs are quickly taken into account. Tenants want business centers where people can spend an entire day in comfortable conditions. Customers want a children’s area, lounge area, cafes and restaurants both within a building and within walking distance.
In Ukraine, a typical office is a “product of the twentieth century” with a small hall, limited parking spaces, almost no additional services, which cannot meet the demands of post-COVID work.
Investors are now turning to a hybrid office model, which includes a chain of main offices and a chain of small satellite offices near large apartment complexes. This allows employees to work within walking distance of their homes, and it has everything they need to relax after work. Hours spent in a hybrid office are flexible: Employees can only meet when they feel that current projects require discussion. To meet these needs, hybrid offices offer flexible chat rooms – or co-working – which can be booked by appointment.
A new model
However, not all businesses are big enough to need a chain of offices. This is where coworking spaces come in. In addition to allowing flexible working hours, this format attracts clients with negotiable lease terms, different sizes of rented spaces, and the ability to quickly change work formats.
Coworking spaces are an option not only for small businesses with up to 10 employees, but also for freelancers who want a productive atmosphere and network. Art-zavod Platforma, one of the first co-working spaces, was opened in Kiev especially for this purpose. We wanted to offer start-up creators and young entrepreneurs, especially in IT, a place to find like-minded people, expand their network and find start-up ideas. It was followed by the Korolenkovskaya Business Center and the next Platforma should be completed within the next two years at the latest.
I think it is important that Ukrainian IT talents have a place to communicate, exchange experiences and support each other. We want this space to become a city within a city where great IT products see the world for the very first time, like in Silicon Valley.
If co-working spaces are not an option, start-up founders can try so-called co-living spaces. These are apartments where each resident has a single private room and shares common areas with the other residents. Like coworking spaces, coliving brings together people with similar ideas and values, except in the latter they also share household chores and spend free time together.
I believe residential premises and cohabitation spaces have proven to be a great place to find community. We are now planning to open the first spaces of this type in Kiev, both in an urban and rural format. A sense of community seems to be an important component of a quality lifestyle. Young families and singles choose this option because they want to expand their social network and exchange ideas. They want to immerse themselves in their project and progress quickly.
Analysts expect global office rents to increase in the first quarter of 2022 and return to pre-crisis levels in 2025. This means 2021 could be a good time to invest in shopping centers. business. It is possible to find developments at reasonable prices, especially since the market was overheated in 2019 and early 2020.
In Kiev, the trend towards a hybrid office model may launch new projects on the left bank of the Dnipro river. Industrial space can be transformed into modern business centers. Low investment costs for purchase and renovation, along with a shorter project duration and lower market density, will allow investors to offer quality office space at two-thirds of the class rental price. B near the city center.
It is important to keep in mind, however, that unlike stable global markets where it is typical to sign a 10-year rental agreement, in Ukraine rental periods of three to five years for small spaces are longer. current.
At the same time, the co-living spaces will switch to medium and long-term leases because they are less risky for the owners.
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