The Impact of Covid'19 on Luxury Property and Residential Agency
The truth of the matter is that we just don’t know.
Sitting here at home, a week after the lockdown has been extended for at least another 3 weeks and with breaking news from the WHO that there is no evidence of immunity in Coronavirus survivors, it’s easy to become disheartened & distracted by the relentless bad news. Trapped as we are within the confines of our homes, entertaining the children, planning the weeks meals and weekly shop, dodging neighbours on our allocated hour (or so) of exercise, and all the while with a journalist class behaving like toddlers in the back of a car screaming “are we nearly there yet?”.
Oh, and of course, doing what we can to keep our businesses afloat.
There are however flashes of hope and positivity within the gloom of our current predicament. Community cohesion on a level this country probably hasn’t seen since the blitz, families talking more than they ever have before, parents able to spend real time with their children, time to educate, to play and time to inspire. With humans somewhat “confined to barracks”, so to speak, another benefit is that the environment is getting a break from our relentless pollution. A particular highlight for the residents of Punjab, who for the first time in 30 years are able to see the peaks of the Himalayas from over 100 miles away, now that the smog has cleared.
You see, whilst the truth of the matter is that we just don’t know when this is going to end, what we do know is that when it does, in all likelihood we will ultimately find ourselves in a better place. The same will be true for those businesses which survive, and it is with this survival mindset that we must set ourselves to the task of ensuring our businesses make it through. Difficult decisions lie ahead.
The property industry has, without question been seriously impacted by the lockdown. An industry which for the most part heavily relies upon person to person contact and the ability to visit homes which are not our own, was never going to come off lightly in the event of a lockdown. Almost overnight the market shut down, not only on the basis of viewings, listings & enquiries, but also from a financial perspective, with mortgage products being withdrawn, applications put on hold and valuations cancelled.
Now of course in moments like these, there are always going to be reports of activity, reasons for people to trumpet successes, and so they should. New offers, new instructions, exchanges & completions are all reasons for those involved to be cheerful. Sadly however, these are the vestiges of what has been, not a bellwether of what is to come.
So what might the world of residential agency look like when we eventually step, blinking, back into the sun?
It appears that our emergence from lockdown is likely to be staged, and remarkably in a report published recently, estate agents are on the list of those businesses recommended to be released first! We are, surprising as it may seem, a starter motor in the economy as our transactions lead to tax revenue and jobs, as all of us in The Luxury Property Network will be aware. From plumbers, electricians and carpenters to interior designers, architects & mortgage brokers, many jobs start with the purchase of a property, so it stands to reason that somebody has got to sell them.
Viewings however are the first point of friction, as movement is likely to remain somewhat restricted and social distancing will almost certainly remain a part of daily life for some time to come. This is where I predict we will see the enthusiastic adoption of “virtual tours” coming in. It has been remarkable to see how swiftly some agents have managed to adopt the “virtual viewing”, be it a video tour done via WhatsApp, a professionally shot video through the property, or the full blown virtual showcase enabling buyers to walk through the property in their own time, taking measurements & admiring the view from the master bedroom window.
If, as I predict and indeed to an extent we are already seeing, this technology is readily adopted by agencies, there is a chance that this may well become the norm over the coming months. However, no matter how good a virtual reconstruction of the real world gets, it will never replace the need to actually visit a home you intend to buy. Nevertheless in a society doing its best to curtail the spread of a virus passed from human to human, virtual tours have the ability to significantly decrease the number of times any one home is visited and indeed how many people a day an agent comes into contact with.
Unfortunately for some however, virtual tours also have the ability to do them out of a job. Staff, offices and expenditure related to viewings, form a significant part of the overheads of an agency, especially one where “viewing figures” are a key component of the daily and weekly KPI’s. In brief, if your belief is that the quantity of viewings counts more than the quality of viewings, then it is easy to see why you would need an army of negotiators, the offices to house them and the cars for them to run about in. However in a post pandemic world, vendors in particular will rate quality far higher than quantity, and the moment agents realise the opportunity this creates and adapt their models accordingly, may well be the moment that forever changes estate agency in the UK and ultimately saves it.
Global and national emergencies such as the one we currently face, have historically always accelerated change, both within society and within the economy. The same is true of this pandemic, it will change our society. How exactly, only time will tell but my guess is that the use of technology will form a significant part of the change we witness. Virtual meetings, virtual conferences, webinars, facetime, contactless payments, working from home, shared drives and virtual tours have suddenly moved from the realm of the exception to that of the rule. Yes, there will be casualties of this change, as there always are, however a reduction of staff in one area of the economy, typically leads to an increased requirement elsewhere and opportunity for those willing and able to retrain.
We can’t pretend that this pandemic isn’t going to be a blow to many businesses and wider industries, but let us hope, as we have done before that we use it as a springboard to find innovative ways to improve our models, our society and our economy and that ultimately we bounce back stronger than before. In the meantime we should cherish the opportunities that lie before us whilst we continue the lockdown, be that helping our communities, cherishing time with our families and amongst all of that making a plan for how our own businesses can adapt swiftly to the world that confronts us.
Stay safe, stay home, protect the NHS and save lives.
Rupert Collingwood is the Founder of The London Broker & The London Management Company.
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