The Counselors of Real Estate (CRE) has identified the current and emerging issues that are expected to have the greatest impact on real estate, with the COVID-19 pandemic being the primary concern of its 1,000 members. CRE released its Top Ten Issues Affecting Real Estate in a webinar presented exclusively to members of the Florida-based National Association of Real Estate Editors.
“The change caused by the COVID-19 crisis and its consequences will teach us about priorities, resilience and demand in ways that we have never dared to test before,” said Michel Couillard, 2020 CRE Global President and President and CEO of BUSAC Immobilier in Montreal. “The top ten issues for 2020-2021 are intertwined and attempt to superimpose this new world onto an already changing real estate environment. » “In reviewing real estate markets, we must consider existing fragility, adaptability to new demands and potential relevance for new markets,” Couillard said. “Demand will be defined by the extent to which this crisis causes us to abandon old habits and adopt new ones. The length of the lockdown was a factor, as was the confidence with which we emerge from it. » Economic renewal ranked second on CRE's list, with the US economy showing signs of decline before the COVID-19 pandemic.
"There were a number of statistical signals of deceleration for those who wanted to see them," Couillard said. “The challenges facing the economy and the real estate industry are deep and persistent, with leisure and hospitality, retail, construction and air travel seeing slow and partial restarts through 2022. The advisers cite that the impact of the economic lockdown on state and local tax revenues could reduce non-federal government employment levels and shelve important infrastructure projects, these risks suggesting an unusual recession in "W" shape. “The post-COVID-19 economy will be constrained by long-term potential GDP growth of only 1.5-1.6%. This is the “new normal” for which we must prepare, “added Mr. Couillard.
Capital market risk rounded out the top three areas of concern for CRE, as the past four months showcased not only the real-time volatility of capital markets, but also confirmed how quickly debt liquidity and Equity can stop flowing when risk and returns are difficult to measure. "One thing we've seen since March is that volatility has increased, which makes debt pricing more difficult," Michel Couillard said. “Federal intervention has helped limit a full seizure of the markets, but does not necessarily alleviate the long-term concern about defaults and losses. Although price stability and liquidity seem to have recovered somewhat, payment delays and defaults have increased significantly. »
Other issues identified by the CRE are public and private debt, affordable housing, flow of people, use of space, technology and workflow, infrastructure and ESG (environment, social and governance), respectively. “Clients of advisors seek unbiased and objective advice on the critical factors that will impact all areas of real estate today, as well as issues that could affect their decisions over the next ten years. This thought leadership initiative is an invaluable service to these clients and to the real estate industry in general. »