STA, 7 April 2020 - The real estate market has slowed down as measures to restrict the spread of the coronavirus epidemic have been introduced, with deals concluded only retroactively and property inspected only on-line. Real estate agencies have seen a significant drop in turnover, which they hope will be compensated after the epidemic ends.
Agencies say that clients have not abandoned their intentions to buy or lease real estate, and that the true impact of the crisis would depend on the duration of the epidemic and the purchasing power after it.
Boštjan Udovič, the head of the Real Estate Association at the Chamber of Commerce and Industry (GZS), has told the STA that real estate agencies are currently only providing services which could be provided without physical contact with clients.
Some real estate agencies have completely suspended their work, and "turnover has dropped significantly", he said. It will be possible to compensate for this after the epidemic ends, but this will depend on the general economic situation and purchasing power.
The real estate agency Stoja Trade is concluding contracts retroactively for deals agreed on before the measures were introduced. "Instead of inspections in person, we send interactive video clips of real estate to our clients," director Zoran Đukić has told the STA.
Zoran Veleski of Mreža Nepremičnin added that the number of calls from potential clients and demand in general had dropped in comparison with recent months, "which is understandable, as people are dealing with other priorities".
While the number of transactions is dropping, prices remain stable. "Everybody is waiting for quarantine to end, and prices will depend on the duration of quarantine," he assessed.
The short-term lease market is practically dead, as tourist visits have ground to a halt. "Many real estate units, which had been intended for temporary lease to tourists, are now empty. Some of them have already been placed on the market," Udovič said.
He believes that this, if the state fails to take quick measures, will not result in growth of the long-term lease market, as owners still almost exclusively decide to rent their real estate for less than 12 months for one reason or another.
Đukić expects a slight market correction when it comes to rental real estate because of the apartments which used to be leased via Airbnb. "There will be no major changes in the prices of rents, but the crunch will ease."
According to Udovič, the key will be the developments in the first months after the end of the epidemic, as turnover on the real estate market largely depends on the economic and financial state of the country and consumer confidence.
"If they reduce their consumption out of caution, the real estate market will suffer a huge blow," he said, adding that the state had taken measures aimed at preventing such consequences relatively quickly.
Stoja Trade has established that clients have only postponed the planned transactions, as a majority of clients are waiting for quarantine to end, and "if this does not take too long, major changes are not expected due to the specifics and small size of the market".
Đukić also expects that, considering the situation on stock markets and financial markets, people will continue to opt for safer investments, including real estate, which keeps its value in the long run.
Veleski agreed that real estate is one of the safest investments, but he also assessed that the situation on the market will depend on the duration of the lockdown measures and the drop in GDP.
"We can only hope that the government will support the economy with measures similar to those in other EU member states and that it would not leave the construction sector high and dry again," he added.
The experts have assessed that the measures from the EUR 3 billion legislative package to aid the economy and individuals will be useful, adding that it is understandable that it was not able to tackle all issues.
Udovič expects additional measures in the coming weeks, which would be focused on keeping the economic activity running. "From the aspect of real estate, care for an investment momentum after the end of the epidemic will be of particular importance."
He also expects that if the situation permits, the government will start easing up on the restrictions related to certain services, including real estate agencies.
Veleski noted that in addition to wages and social security contributions, companies have many other costs which they are not able to cover for months if their turnover is zero.
"The passed legislation is certainly beneficial also for our activity. I have concluded based on talks with agents and many others who are not part of our team, that they will be able to survive these few months," he added.