COVID-19 Impact On Property Management - How To Ensure The Best Use Of Property Management Software?

COVID-19 Impact On Property Management - How To Ensure The Best Use Of Property Management Software?

The COVID-19 pandemic had an unprecedented impact on humans and businesses. Navigate this impact by maximizing the potential of property management software.

Market Insights

The COVID-19 pandemic had an unprecedented impact on humans and businesses. It has completely changed the way we used to live our lives and do business. If we look into our history, an epidemic or a pandemic followed by an economic downturn has had an immediate to short-term impact on commercial real estate (CRE) asset value. However, the real estate industry recovered from these events swiftly. But this time, this pandemic's expansiveness and unprecedented reach profoundly impacted the CRE industry.

Pre-COVID-19 Condition of CRE Market

Before the outbreak, the CRE industry was in a strong position. Everything from balance sheets to capital availability and liquidity was in good condition. Companies were efficiently managing their debt maturities to longer positions. According to the global survey, a commercial real estate outlook for 2020 was wide, and it was found that most real estate owners were expecting capital availability to increase in 2020. According to the AFIRE 2020 International Investor Survey, the US CRE market continued to maintain global attractiveness till March 2020 (it was released in early March).

Impact of COVID-19 on CRE Market

When COVID-19 was declared a global pandemic, the financial markets in the United States declined sharply. Rather than the typical lag, the CRE industry was affected immediately. The biggest reason behind the fall was because trade activities and tenants’ businesses were shut down.

  • Lending: Though the market remained accessible, given the enhanced risk as lenders were treading with caution. CMBS delinquency rates got higher, which were consistent from the past three years.
  • Liquidity: Several property owners faced liquidity management issues due to rent collection delays and increased costs. Also, many CRE borrowers from the affected sectors like hotels had to apply for debt relief due to a liquidity crunch.
  • Leasing Volume: Some submarkets, such as Manhattan, witnessed a 25% YoY decline in leasing volumes.
  • Investments: Due to increased uncertainty and valuation concerns, new investments slowed down.
  • Operations: Because of pandemic directives by the government, many hotels, malls, offices, shops, and coworking/living spaces were completely shut down. Operational costs increased due to enhanced focus on cleaning, sanitation, security, and thermal checkpoints.

Impact of Pandemic On Different CRE Subsectors

The pandemic and economic situations had significantly influenced property owners, managers, developers, and protectors. Given below is the breakdown of the impact on CRE subsectors.

Builders & Developers : Project timelines and cash flows were significantly affected due to halt in certain types of constructions, especially new developments. According to the contractor survey, it has been revealed that more than half of the US construction company respondents were halted or suspended. More than 2/3rd of projects experienced delays due to a shortage of materials and personal protective equipment. Those sites where construction continued had to adhere to guidelines on social distancing and frequent cleansing or disinfection of common areas and construction equipment. Furthermore,HPSI declined 11.7% in March to 80.8%, demonstrating a decline in new home sales.

Private Equity Real Estate (PERE): There was no immediate decline in PERE investments. Investors focused more inward by helping portfolio companies manage liquidity and costs. Some investors focused more on resilient assets than those supporting the digital economy.

Property Managers: The property managers expected revenue growth and witnessed a fall of 11% points since 2019. 64% of property managers reported that pandemic had a negative impact on their business profitability. A Study also revealed that 67% of property owners had to work with the residents to make a plant pay back their rent over time. 36% of property managers had to keep rents flat or offer concessions upon lease renewal. 79% of property managers had to waive fees that were the primary source of revenue. 77% of property managers believe that it will take at least 2 years to increase their revenue.

Projects: Co-living/co-working and holiday rental spaces have seen an adverse effect, and there are fewer chances of returning to the short-term lease model in the near future. However, companies offering digital solutions for property management did well as CRE companies had to rely on technology to manage their business operations and interact with tenants/clients during pandemics.

How Did Covid-19 Accelerate Digitalization In The Real Estate Sector?

When it comes to technology adoption, the real estate sector has always been the least interested. Though technology has been the driving force behind innovations in this sector, this sector has not been one of the pacesetters when it comes to the complete digitalization of real estate. But pandemics completely changed the situation, and it provided a sudden glimpse into the future world.

Before the pandemic, experts had a future vision where digital technologies would become central to every interaction, and they were expecting this to happen in 5-10 years. But Covid-19 crisis forced real estate firms to adopt different digital channels to prevent a halt. Global shutdowns brought technology usage to the forefront, making a new beginning and survival of the real estate business possible. Internet of things (IoT), advanced project management tools, digital engineering, improved connectivity, adoption of smartphones, and data proliferation are some technologies that completely changed operating models, making new ways for the real estate sector.

Let’s dive deep into different technological advancements that helped the real estate business overcome pandemic crises and flourish well, even in difficult situations.

  • Contactless Operations: Making all sales and marketing processes contactless was the biggest challenge for real estate. But features like video conferencing, lead tracking, real-time inventory details, virtual tours, secure online payments, one-click bookings and cancellations, and post-sales management let property managers and real estate developers implement contactless selling and marketing.
  • Team Collaboration: PMS (Property Management Software) also enables remote collaboration with the team easily with features like dashboard business intelligence, real-time reports, cloud telephony, document management, and broker integration. All these features have enhanced the effectiveness of real estate business operations and provided an outstanding experience to the users.
  • Digital Experience: Several apps and PMS solutions utilize AI (Artificial Intelligence) to manage property listings and market them. Different digital tools deliver omnichannel experience, understanding the fact that customers are key to balancing success. Remember, automation and digitalization have increased customers’ expectations and demand; therefore, you must excel in all customer service areas no matter what.
  • IoT & AI: Using IOT & AI in property management opens new doors for real estate firms to generate value. Property Managers can handle different operations smoothly. They can carry out real-time management of different tasks; thereby, improving the tenant experience. Predictive maintenance can help reduce the impact on tenants. With AI & IoT, property owners can better demonstrate their properties without any need for an agent.
  • Big Data Analytics: Big Data can help professionals in understanding their market as well as consumer behavior. They can get accurate data in real-time, which will, in turn, empower investors, developers, and property managers to have a clear picture of opportunities and assess the risk. Moreover, users can access the investment opportunities on a ‘micro’ level. Several companies leverage different data types to build predictive analysis and algorithmic models for future buying, living, and investment trends.

Getting different apps to take advantage of each technology doesn’t make sense. Instead, you can choose a Real Estate Property management Software equipped with the aforementioned technologies and help you achieve what you aspire.

REDA collaborated with Salesforce and developed Enterprise Real Estate Property Management Software. Our software gets you rid of unnecessary paperwork by storing the data in a secure cloud. Additional benefits like streamlined processes and smart analytics have made the life of property managers hassle-free. Property Management Software (PMS) automates monotonous or time-consuming tasks, making you free to focus on core business matters.

With PMS, CRE companies can reimage their operations by assisting through virtual or self-guided property tours and online lease agreements. These integrations bring convenience to consumers that is actually appreciable.

You can incorporate mass emailing and bulk message updates with our CRM For Property Management. The automatic features also allow property managers to send rent reminders and other related updates. It has brought so much convenience to the business functionality that every company employee can easily manage their responsibilities during remote work. You can easily manage accounting, expenses, and taxes while maintaining a log of every receipt and transaction safely.

Finally, with REDA, your real estate business can stand to benefit significantly in the future. With digital data and intelligent, prolific, AI and data science powered technological advancements, you can easily predict your customer behavior and future trends. With a graphical visualization, it will become easy for businesses to take proactive steps and actions. Future challenges are unforeseeable; nevertheless, digitization and technology have always proved their significance and how they affected every sector during turbulent times.

Join us on the journey to hyper-growth with the world’s #1 Real Estate Technology Solution

__wf_313 13 13
Navigate the Real Estate Tech Landscape

Explore a spectrum of solutions that redefine property management and investment opportunities. Your gateway to a smarter, more efficient future awaits

__wf_313 13 13
Experience the Future of Property Management

Schedule a demo and unlock the full potential of our comprehensive ERP solution.

__wf_313 13 13
Stay Ahead in Real Estate Tech

Subscribe to our newsletter and receive cutting-edge insights, updates and innovations from the world of property management.