“ macro trends of urbanization, a growing middle class, and growing inter-connectivity will be able to transcend the temporary disruptions caused by a viral outbreak, and that the recovery of most affected real estate sectors will take place gradually alongside the normalization of business operations once the outbreak begins to be contained.”
With no clear end in sight, many investors are undoubtedly concerned about proceeding with property investment plans. What was once seen as a concerning situation in one area of the world has now developed into a full-blown global pandemic causing widespread social and economic disruption.
The current investment climate is one of uncertainty. On one hand, we have had investors who are very uncertain about whether or not they should proceed with their investments. On the other, we have also seen and served those who wanted to take advantage of the current climate to proceed with their investment plans.
For investors who proceeded to invest, the benefits were clear. Low interest rates combined with advantageous currency exchange rates allowed investors to obtain value greater from what they might have imagined just a year ago. For those who didn’t proceed, concerns were driven either from uncertainty surrounding their own financial situation, or from concerns about the prospect of recovery and subsequent growth for the property market.
However, is there really a cause for concern for the recovery of the market?
Source: SeekingAlpha.com
As we can see in the graph above, Covid-19 is not the only pandemic that our world has faced. The Spanish flu in 1918, HIV/AIDS in 1981, and more recently, the SARS outbreak in 2003, are all examples of pandemics our world has experienced. Despite this, the economy has consistently managed to bounce back and continue on an upwards trajectory.
Of course, a chart of the S&P500 alone does not tell the whole story. If you’re trading in stocks with a short-term investment time scale, there’s no doubt about the high levels of risk you’re exposed to. But real estate is supposed to be a long-term investment. The capability to buy, leverage, and hold, is just one of the key differences between stocks and real estate.
A research commentary released by Keppel Capital on the 10th February 2020 also stated that the investment company expects that macro trends of urbanization, a growing middle class, and growing inter-connectivity will be able to transcend the temporary disruptions caused by a viral outbreak, and that the recovery of most affected real estate sectors will take place gradually alongside the normalization of business operations once the outbreak begins to be contained.
This underscores the confidence that certain investors have regarding the market right now, and it is also the reason why an off-plan property purchase makes greater sense at this stage. Because buyers usually pay the bulk of the price on completion for off plan properties, it allows investors to secure a new asset at a lower upfront cost than the purchase of a completed property. The asset would then be completed at a time when it could start generating returns alongside the recovery and growth of the market.
Should you with to find out more about investing in off-plan properties, our friendly consultants will be happy to have a non-obligatory discussion session with you. Simply leave your details in the form below and we will arrange a call-back for you.
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