The commercial property industry entered 2020 on a good note. We saw positive trends and decent levels of enquiries from both buyers and tenants. We’d like to explore how this positive start has now altered the state of play, as we look ahead at the potential impact of COVID-19.
Let’s start on a positive!
Since the start of 2020, low interest rates (that may drop even lower), were producing demand in the buying market. Strong enquiry levels came from a broad range of sectors including:
● New businesses
● Expanding businesses
However, in the short-term we are entering a testing phase, with great interruptions to the way we normally run both our businesses and daily lives. We’ll continue to keep you posted online about how the global situation is impacting our local market on the Central Coast.
Better Lending Options?
We witnessed early signs and heard firsthand reports from clients that lending criteria was starting to ease slightly. Usually this can boost activity in the market, as more buyers are able to access lending opportunities. It can even mean access to better (more favourable), lending options. With the current state of the economy severely impacted by the COVID-19 virus, we expect to see continued responsible lending practices. We also expect to see a good level of support from the banks to help stimulate the market and economy more broadly.
The Central Coast Region
Until March 2020, the Coast experienced a positive development trend, which would normally boost our local economy and support population growth. A good supply of development properties on the Central Coast shows people’s confidence in the region, as does the year’s early demand for these developments being taken up.
Newly available development properties are a broad mix of:
● Small to mid scale industrial developments
● Commercial developments
● Mixed-use developments (residential and commercial)
● Residential developments.
How will COVID-19 affect Market Flow?
An extremely relevant and, for many, distressing focus of the foreseeable future. We expect to see mixed sentiment in the market as a knock-on result of COVID-19.
On one hand, we expect to see more investors looking to park their money in commercial property. This option is a more stable investment vehicle than shares (just look at the recent impact on the international share market).
Property investment may not be a ‘liquid asset’ like shares, but it tends to be less volatile.
Investing in property can be an attractive alternative in the uncertain economic times we are facing in response to the coronavirus pandemic.
On the other hand, we’ve already seen the direct impact of the coronavirus is reduced market confidence and restricting certain industries from free trade. This will have an extensive impact on the economy. This creates less stable conditions for starting a new business or expanding an existing one.
Certain industries can – and will – thrive through this period (just ask the CEOs of Woolies and Coles).
Those who adapt to the new environment quickly by continuing delivery of their existing services, or shifting focus to provide an alternative service, are better suited to these times.
How will COVID-19 affect Commercial Property?
We expect to see reduced activity, interest, and enquiry levels from various industry sectors, while others will remain strong. This may not have a complete counterbalancing result, but it will help to keep momentum in our economy, which will be crucial to ensuring a fast recovery as we all work together to get past this period.
Chapman & Frazer will continue to operate throughout the COVID-19 outbreak. We have decided the responsible course of action, from both a social perspective as well as staff wellbeing perspective, is to close our physical office for the time being.
Fortunately, we’ve already invested in the necessary technology to allow our team to work seamlessly from home. We proactively did this to enable the continued delivery of our regular services to our new and loyal clients. So, while our office doors are closed, temporarily, we remain very much open for business!
If you have any queries about our availability, remote office operations, or how we will continue to support you through this period – please feel free to reach out to us at any time.