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COVID-19 AND REAL ESTATE FOR RENT INDUSTRY

by Nhu Quynh on 17 Tháng Ba, 2020
COVID-19 AND REAL ESTATE  FOR RENT INDUSTRY
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No one could have foreseen that the whole world would have such a pandemic – nCoV. And more worrying, currently there is no cure or effective vaccine. How long will the epidemic last? That greatly affects the field of real estate for rent and tourism. How long we will tolerate if the epidemic continues in 3-6 months. To answer this question, let me and you analyze the first thing: How will the Covid-19 translation affect the current rental real estate market?

Let’s look at the current real estate market situation first (not influenced by the epidemic). It is easy to see that real estate in Da Nang from before Tet to now has come and went, real estate prices in some areas have gone down very deeply. And the outbreak was in such a moment.

In order to have a more comprehensive view of the impact of the disease on the rental real estate industry, I will summarize the overall impact on the community and then analyze the impact on each industry-related audience.

GENERAL EFFECTS TO COMMUNITY

Effect to community
  • Damage to health, time and costs of medical examination and treatment … and public activities
  • Life-threatening when infected. According to statistics, the average mortality in the world is 3.6%, most of them happen to patients with underlying disease.
  • Temporarily suspending and closing production, entertainment and entertainment activities, … domestic and regional trade activities, between countries and regions.
  • Number of customers declining or no customers.
  • Turnover of businesses decreased, losses, the risk of high closure. Personal income is reduced or lost.
  • The duration of short-term effect may be 1-3 months, long-term 6-12 months.

AFFECT TO COUNTRY

  • The system of hospitals, health care and logistics services … is in danger of being overloaded
  • Blockade of streets, regions and countries
  • Restrict, suspend visa issuance for countries around the world to Vietnam
  • Temporarily suspending activities of public service-providing businesses such as karaoke, bars, dancing halls, massages, etc.
  • Issue policies to support businesses, maintain stability and revive the economy.

IMPACT TO LEASING INVESTORS (INVESTOR)

Impact to leasing investors
  • Tenants request: Discount of rent (15% – 45%), pay ground, payment progress … (When leasing premises, offices, houses / villas / hotels / apartments)
  • Number of tenants decreased, rental price decreased (15 – 35%), large vacancy rate (when self-operated).
  • There is a risk of large-scale infection, the risk of isolation, may close, stop receiving guests in a short time
  • High pressure of repaying bank debts

IMPACT TO LEASE AND BUSINESS INVESTORS (INVESTMENT F1)

  • For operating investors:
  • There is a risk of large-scale infection, the risk of isolation and trouble in business
  • The number of tenants decreased, the rental price decreased, (15 – 25%) with a large vacancy rate, the revenue decreased to a loss.
  • Medium to high debt repayment pressure depends on large capital cost (large scale, chain operations)
  • For investors intending to operate: Psychology of fear of losing customers and losses

AFFECT RENTALS (F2)

  • Risk of exposure and infection from the tenants and the community
  • Restrict travel, transactions …
  • Postpone the accommodation plan in Danang for a short time.

EFFECTS TO REAL ESTATE BROKERAGE FOR RENT

  • Risk of exposure and infection from the tenants and the community
  • Number of new tenants decreased
  • The risk of canceling the contract, from a former tenant
  • Lower revenues, large maintenance costs, resulting in losses

With the above effects, what should you do to maintain and develop in the short and long term? A question that everyone is wondering, where to head, urgently find the solution. Let ECOFORENT provide answers so we can hold hands through this difficulty. Stay calm, we will pass this stage. Maybe luck, we will have more breakthroughs.

Huỳnh Đức Việt – Founder Ecoforent

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