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Property market faces slump

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Property prices are likely to fall as the number of real estate transactions slides this year, realtors said.

While the economic damage from measures to combat the spread of the novel coronavirus will hamper the sector this year, realtors are already gearing up for the post-crisis “new normal”.

Penny MacIntyre, partner at Rego Sotheby's International Realty, said: “We're all conscious of the fact that our market is going to struggle.

“There may be people who need liquidity looking to sell or rent out their properties. And it's likely you're not going to get what you got before. Everyone will have to adjust to that kind of reality.”

Real-estate activities make up nearly 15 per cent of Bermuda's gross domestic product.

Ms MacIntyre said the Government was actively seeking the views of various business sectors to understand how different areas of the economy have been impacted by the crisis and the type of stimulus they need to help.

The real estate industry is working on its proposals to the Government, which Ms MacIntyre did not wish to pre-empt.

However, she said the industry had long argued for initiatives to stimulate sales, whether to local, permanent resident's certificate holders or international buyers, to help to move inventory that had been on the market a long time and to boost stamp duty takings for the Government.

“We're not pushing to open the gates and say, ‘everybody come in' — that's not the initiative,” Ms MacIntyre said. The important thing right now was that the community worked together to deal with the public health threat, she said. Success on that score would add to the island's appeal for investors.

Brian Madeiros, president and chief executive officer of Coldwell Banker Bermuda Realty, said he was reluctant to make predictions about the post-lockdown market, given “that we are currently navigating the largest global and local disruption we have experienced in most of our lifetimes”.

Mr Madeiros added: “Of course, we need to be forward looking, but our company's strategic planning is now a week-to-week exercise.”

His firm's opinion is that real-estate sales transactions in 2020 will number about 150.

“To put this into perspective, last year we reported that the market produced 200 sales transactions mirroring the worst ever performing year in 2012 when we recorded 200 sales as well,” Mr Madeiros said.

“We are of the opinion that a number of 450 sales transactions a year is an appropriate target for our island market.”

Both Mr Madeiros and Ms MacIntyre said they had continued to receive queries from potential buyers, both local and international, as online portals have seen healthy traffic during lockdown.

Mr Madeiros added: “Our land survey team, one of our in-house leading economic indicators, have been busy scheduling new land surveying jobs for post-lockdown. Instructions relate to both sales and construction-related work.

“The banks are still very active with preapprovals and working remotely and we have been in regular communication with their teams in order to ensure continuity of service.”

He added that the real estate division of the Bermuda Chamber of Commerce has taken “new normal” guidelines from the US National Association of Realtors and modified them for Bermuda. The industry was working with the Government to ensure it met required health standards for its impending transition, he said.

“Through the use of enhanced technology and modified business practices we are confident that we will be able to serve our market stakeholders well and work hard to get our marketing moving again,” Mr Madeiros said.

All businesses would have to adapt, Ms MacIntyre said, and real estate would at the heart of that.

“There is no room to sit idle,” she said. “We have to change the way business is done. When I step back into my office, I don't expect things to be anything like they were five weeks ago. That's the reality and we all have to accept that.”

Technology that has risen to the fore during lockdown would be a key factor in the new business environment, she said.

“Fortunately for our company, we've been using technology, remote working capabilities and cloud services for years,” Ms MacIntyre said. “That won't be the same for many businesses. And the ones who did not invest in technology before this, will be the ones struggling the most.”

Before the shelter in place took effect, she said RSIR was conducting live virtual tours of properties.

Users of offices may rethink their need for space, she added, after the experience of entire staffs working remotely. And the workspace itself will change.

“You're not going to be able to have people three feet apart, now it will have to be six feet,” Ms MacIntyre said. “You've got to think about your sanitation and cleaning of all rooms and surfaces. It's about adapting to a new way of doing business.”

Penny MacIntyre, of Rego Sotheby's International Realty
Brian Madeiros, of Coldwell Banker Bermuda Realty

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Published April 29, 2020 at 9:00 am (Updated April 29, 2020 at 4:15 pm)

Property market faces slump

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