The Fifth Estate explores if air conditioning can carry the virus through rooms and transmit coronavirus without close contact of people. The residential and commercial sectors struggle through another week, and the finance industry takes its biggest hit since 1987.

ARTICLE OF THE WEEK

Coronavirus

Coronavirus: What we know so far about managing the risk in buildings

The Fifth Estate
The outbreak of COVID-19 has altered many aspects of our daily routines, with more flexible working locations to grocery shopping curfews. However, the constant is concern about the spaces we live and work in. The Fifth Estate examine how safe from infection these locations are. Read more…

NEWS SUMMARY

Key Themes:

  • The early phase of the COVID-19 pandemic delivers limited clarity in forecasts by property analysts

  • Residential prices and auction rates remain strong, but analysts are predicting a quick fall from glory

  • Co-working spaces may emerge from the coronavirus epidemic triumphant

  • The RBA cut rates again to an historic 0.25% in an unscheduled, mid-month meeting

Residential Sector
 

The AFR reported the view of UBS, that a worst-case scenario could see the COVID-19 pandemic dragging on through to September and could result in a 20% fall in house prices. The ‘intermediate’ scenario, potentially the ‘base case’, would see infection rates peaking in June and house prices falling by 5%. However, in a ‘moderate’ scenario, infection rates would peak in May and house prices could rise by 5%. Obviously, it is unclear which events are most likely at this point. (House prices could drop by up to 20pc if pandemic worsens – Nila Sweeney, 18/03/20)

The Australian also reported that house prices could drop 20% if unemployment rises to double digit figures. An AMP Capital report shows that with a recession on the horizon, the momentum of the housing market could be disrupted. However, this again is an estimate of a worst-case scenario. (Home prices to drop 20pc if unemployment spikes: AMP Capital – Mackenzie Scott, 19/03/20)

The AFR reported that the new-housing shortfall previously predicted is worsening due to uncertainty amongst new-home buyers. 2019 already saw 25% less new home lots than 2018 being released by developers according to the Urban Development Institute. The lower demand could further delay the delivery of new projects. (Coronavirus adds to growing housing undersupply risk – Larry Schlesinger, 18/03/20)

The Urban Developer analyses the impact of COVID-19 on the residential market: How Will Coronavirus Affect Property Prices?

Auction clearance rates have remained strong
despite the current economic climate and low consumer confidence. However, there
is downside concern as uncertainty rises due to a spreading virus.  The Real Estate Conversation: Auction markets strong despite coronavirus concerns.

Commercial Sector
 

Coronavirus is forcing significant alterations to indoor auctions. Read about it on Commercial Real Estate  in ‘CBRE to cap number of people at auctions on health fears’.

Offices

The Australian reported that listed real estate investment trusts (REITs) are currently in better shape than they were before the GFC and that large REITs typically had adequate headroom in their financing covenants. However, there are still vulnerabilities – credit markets could seize up and offices could be closed to avoid coronavirus. (Better placed than GFC, but offices still risky – Ben Wilmot, 18/03/20)

The AFR reported that,
according to UBS Asset Management, flexible office companies may be suffering
now as co-working users avoid crowded and shared spaces, but they are likely to
emerge the winners of the pandemic. With COVID-19 encouraging flexible working
hours and spaces, tenants may review their real estate requirements once
the pandemic dies down. If the ‘new’ working arrangements prove to be equally
productive and efficient, companies could opt for more adaptable spaces and
leases. (Co-working could emerge as a big winner from coronavirus – Ingrid Fuary-Wagner, 18/03/20)

Retail

The AFR reported that panic buying, triggered by the global coronavirus outbreak, is increasing turnover rent payable to supermarket landlords. Landlords who have large proportions of their portfolios occupied by supermarkets are expected to be net beneficiaries through the increased turnover and foot traffic, according to Jefferies analysts. (Supermarket landlords cash in on virus crisis – Nick Lenaghan, 18/03/20)

However, non-food retailers are still suffering. The Urban Developer explains the ups and downs of the retail market in ‘Retail Hurts as Stockpiling Boosts Supermarkets’.

To the relief of hundreds of these struggling retailers, the Australian reported that Scentre Group is offering assistance to its tenants. Westfield’s owner has not specified what type of assistance it will offer, but many are hoping rent relief will be a part of the proposal. (Scentre Group flags rent relief to mall retailers – Eli Greenblat, 18/03/20)

Finance
 

The Urban Developer outlines financial assistance offered by the government in ‘Federal, State Governments Plan Further Coronavirus Stimulus’. 

ASX

The Age reported on the ASX’s biggest fall since the 1987 recession this week, with the All Ordinaries dropping 9.5%. Like the stimulus package, attempts by regulators and institutional shareholders to calm the market made little difference to the dramatic sell-off. (Sharemarket suffers biggest fall since 1987 crash – David Scutt & Lucy Battersby, 16/03/20)

RBA

The Age reported that in a rare extra meeting this week, the Reserve Bank of Australia cut official interest rates to a record low of 0.25%, as a financial response to coronavirus induced share market turmoil. RBA Governor Philip Lowe explained that it will not lower rates further, but it may engage in quantitative easing to flood the system with liquidity and avoid market collapse. (RBA prepares to boost economy amid warnings of jobless spike – Shane Wright, 19/03/20)

Read what Philip Lowe said on The Urban Developer: ‘Extreme Uncertainty’ Forces Unprecedented Rate Cut. 

DESIGN & ARCHITECTURE

Glass corridor connects underground concrete extension to house in Spain

dezeen
Architects Jordi Hidalgo Tane have designed a class corridor connecting an old stone house to an extension hidden under a Spanish hill. Concrete, wood and stone are utilised in a way which mimics the surrounding mountains and hillsides. Read more on dezeen…
 

To learn more about Debuilt Property please visit www.debuilt.com.au or email either Paul: pabrahams@debuilt.com.au or Daniel: dburger@debuilt.com.au.

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