If you are thinking about buying a property or moving to a lower rent, now could be a good time as the COVID-19 pandemic continues to significantly impact the local real estate industry.
President of the Association of Real Estate Association Mark Edghill told the Business Guardian there’s a lot of inventory on the market and more coming onto the market.
Edghill said; “You get a few of the high end. You have quite a number of commercial properties and you have some in the upper middle income bracket that have been coming on the market.
“There were also several projects which were in works before COVID that are now becoming available in the $1.2 to $1.6 million range,” Edghill added.
He noted however, that rental prices have fallen across the board specifically in the commercial area, as there continues to be “so much inventory competing against each other.”
“It is coming down to something is better than nothing so if you have the option of someone looking to rent and you’re willing to drop your rent to a level to attract someone to take advantage of your space then that’s what people are tending to do,” Edghill added.
But, he said some cannot take a lower rent due to financial commitments, including paying a mortgage .
“They are then still going to find themselves in a problem because they have no tenants, they have no income coming in. So if they take a tenant at a lower rent, even at a loss it means they are still off setting what they have to pay on a monthly basis,” Edghill explained.
On residential rentals, he said because the income of many have been comprised due to COVID, people have been asking for price decrease.
“They are working less hours or getting less salaries or some are not getting any salary at all. So some people may have to relocate. We have people having to vacate one place to separate from each other because the two people cannot live together any more as they have been tapped in a house under quarantine,” Edghill said.
No revenue is earned by a real estate business unless a deal is closed which entails either the renting or selling and sometimes management of a property.
“Real estate agents will now have less income because they are closing less transactions,” Edghill said, adding that income largely depends on the clientèle.
He said for instance, if one agent has clients with job security and are actively seeking options, obviously there will be a lot of business.
“If there’s more clientèle in the middle income bracket for instance, between the $2 and 3.5 million bracket, you may not be doing too much business because you may not have many people feeling very secure given the current circumstances in the country and the economy,” Edghill said.
He added that banks are also being a lot more rigid in their mortgage approvals, paying particular attention to what sector the borrower operates and also looking at where the income comes from and how secure that might be in making mortgage payment commitments.
Edghill noted, however, that banks have been working with clients facing financial difficulty.
More value on homes
Terra Caribbean CEO Jean-Paul de Meillac said he anticipates the residential segment of the real estate industry to continue to move as people are now valuing their homes than ever before.
“Their home is what kept them safe during this pandemic and they have realised that if they are going to be spending more time in their homes they may as well upgrade a little bit. Others are looking to buy a more spacious home for their families or upgrade their homes,” de Meillac said.
Continues on BG5
He added trends, even after COVID have shown that buying continues in the affordable segment of the market which includes properties costing $3 million and under.
Rentals costing $10,000 and under also continue to do well despite tough times, he said, noting that in certain areas there have been a reduction in prices in residential rentals.
On the commercial side, he said there has been downward pressure.
de Meillac said pre Covid this segment was already facing challenges, particularly on the high-end side, categorised as A and B office spaces.
“With the downturn of the oil and gas industry three years ago there was an excess of office space on the market because the majority of that office space is built for the oil and gas industry.
“Now post COVID with the work from home arrangements this has placed additional pressure on the office segment of the market,” de Meillac added.
He noted on the retail aspect of the commercial market retailers have been cautious.
“Retailers are holding out for Christmas to see how this goes and if that does not go well then that segment of the market will feel further pain,” de Meillac noted, adding that restaurants which occupy rental spaces have also been negatively impacted.
In a interview with the Oxford Business Group which explored COVID-19 economic impact assessments de Meillac said as the country entered its fourth year of economic downturn, sellers have realised they need to adjust their expectations.
“Whereas previously a large portion of business came from sales at price points between TT$3m ($443,000) and $6m ($886,000), we have seen a decrease in sales at these prices, with most properties now selling at TT$2.5m ($369,000) and below.
“This demonstrates how much the majority of buyers can afford with combined incomes. Investors who in the past would have bought high-end properties to lease to expats have now exited the market,” de Meillac said.
He also noted there has been a marked change from house and land ownership to townhouse and apartment-style living. Developers, de Meillac said are now building properties at greater densities and offering products that are more approachable. “A ready-made townhouse is more palatable to first-time buyers than buying empty land or real estate in need of work. The market demands this type of mid-range property: it is affordable, offers ample security, and nowadays, with busier lifestyles and long office hours, hard-working individuals want to come home to a finished, maintained space,” de Meillac added.
Still some opportunities:
Edghill argued that despite challenging economic times there are still opportunities in the higher-priced bracket, both commercial and residential, .
“But those are few and far between and those buyers are definitely negotiating and looking for a deal. They are definitely not looking to pay pre-COVID valuation price,” Edghill explained to the Business Guardian.
He noted the middle and lower income bracket especially, has been impacted, adding that the revenue which individuals or businesses need to purchase or invest in properties comes from either their own businesses or their employment.
“There are people who have either lost their income or are surviving on reduced wages because of job loss or temporary suspension from work without pay due to a number of factors including reduced hours and business closures,” Edghill said.
He said business-owners in the middle and upper income bracket have found themselves financially impacted by the Government’s restrictions and are cautious consumers avoiding exposure, which compounded the already challenging business environment due to the downturn in the economy and reduced consumer spending.
“They obviously would not have had the revenue coming in that they previously did to afford them to invest in new or additional real estate,” Edghill said.
He said sectors that continue to maintain job security such as those in the public sector, supermarket, and pharmacy businesses and whose salaries have not been affected will still qualify for mortgages.