The Impact of COVID-19 in Industries
The world, as we all know, is in shambles when the COVID-19 virus suddenly spread and took the lives of many. People are in constant fear of being infected – businesses are affected and so is the economy. According to the latest reports, the property stocks of Scentre Group in the last month fell by up to 25%. It may look like it’s not that big of a deal but the challenges property players will face are just starting.
Experts predict, based on previous experience that there is a good chance that this fall will be followed by lower interest rates and then a possibility of rising costs, as well as tougher finance.
Crises always have an impact on the economy – this pandemic will for sure do a lot of damage. In the past, the property industry that emerged after huge crises took place. The tourist sector will also most definitely take a hit from the current situation. Hotels, as well as retail, largely depend on tourism. With implementations such as lockdowns and community quarantines, tourism will be largely affected.
A report by the Australian Financial Review, occupancy in apartments and short-term accommodations are down. The rates for these are falling as well. This could be a bigger problem for home investors or owners especially if they are highly dependent on the income from short-stays.
There’s also another very big problem home investors could potentially face.
What would happen if one of their tenants contracted COVID-19?
Since February, a number of tenants already requested rent abatement or reduction because jobs have been affected by the current situation. Retailers were forced to close down temporarily, which affects the income of a lot of workers. Offices had to figure out how to implement social distancing and avoid meetings that would require close contact with employees.
It’s important that lessors and homeowners are updated about the protocols in terms of the current situation. Certain allowances or considerations in terms of payments must be given to tenants, but when it comes to health issues it’s best to coordinate with the Government.
In terms of the building and construction industry, experts are predicting it could slow down or even shut down temporarily since many of the materials typically used to build come from China. As far as the mortgage market is concerned, as mentioned, interest rates have fallen but some borrowers were unable to secure their loan after being withdrawn in recent days. Other instances include lenders charging a much higher loan price than what was previously offered.
Some industries will for sure, suffer longer specifically the retail industry. The world is hoping that this virus will die completely as soon as possible and the negative impact is not as intense as experts expect. We will see in the next few weeks how all of this will unfold.