We are almost half way through 2021 and Covid-19 is still not showing signs of stopping. Surpassing its predecessors (SARS, MERS), Covid's impacts reached a global scale and caused major changes in social norms. Prior to 2020, remote work arrangements are not widely accepted, with big companies like Yahoo, IBM and HP which tried and failed in implementing remote work. Now, remote work has become a norm "overnight" and propelled companies relating to remote work to "stardom". For example, Zoom, which was founded in 2011 and listed in April of 2019, saw its share price sky rocketed 800% from US$67.28 in Jan 2020 to US$559 in Oct 2020.
With this new norm, many are now working from home and major companies announcing permanent work from home arrangements. The home, which used to serve as a place to relax and rest, is no longer being seen as the same. As people are spending more time at home, larger homes are now more desirable. Apart from size, people's preference of the location of homes have been greatly affected as well. Like how animals migrate to different parts of the world due to the changes in climate, Covid-19 has sparked a new norm, which we coined as Covid Migration.
There are many factors that caused this Covid Migration. The work from home (WFH) new norm, the differences in effectiveness of Covid measures implemented by countries/states and economic opportunities are some of the major factors creating this new global phenomenon.
WFH - the New Kid that Rocks
Other than larger homes, distant from workplace is losing its importance when considering the ideal home. People used to pay a premium to be as near their workplace as possible. We are now seeing a trend where people snatching homes further away from their workplace to avoid paying the premium, especially when the workplace is located in an area where they have to pay a premium to get a home in that area. As reported by the Business Times on 01 Jun 2021, in the US, the demand for homes outside the urban core has increased so much that developers are unable to keep up. With major companies like Facebook announcing permanent WFH arrangements and employees from Apple pushing for WFH arrangements, WFH or partial WFH arrangements will most likely remain. If so, this domestic migration trend of moving away from urbanised region is likely to continue.
Maslow's Hierarchy of Needs
"Maslow's hierarchy of needs is a theory of motivation which states that five categories of human needs dictate an individual’s behaviour. Those needs are physiological needs, safety needs, love and belonging needs, esteem needs, and self-actualisation needs."
The theory states that a person's needs are hierarchical, with physiological needs at the lowest level and self-actualisation needs at the highest level. One's higher level of needs could only be fulfilled if his/her lower level of needs are fulfilled. Health plays a very vital role in one's physiological needs.
With Covid raging, staying healthy and having the right conditions to stay healthy become very important. As we know by now, the effectiveness of Covid measures differs amongst countries and even within a country, the effectiveness differs amongst states. Being able to contain the spread of the virus and minimising the impacts to the economy becomes an extremely arduous task for governments around the world. Both, if not managed properly, would have grave effects to the society. While a complete lockdown is one of the most effective measure to contain the spread, its effect on the economy is detrimental. Hence, there was this famous saying which surfaced last year:
"Covid-19 has killed more invested than infected people"
Effectiveness of Covid Measures & Economic Opportunities
As we have seen by now, the effectiveness of Covid measures differs vastly from country to country and within countries, from state/city to state/city. While "lockdowns" is one of the most effective methods in stopping the spread of Covid, the impacts accompanying could be more devastating than the virus itself. Depending on what is deemed as needed at the point in time, people will start to migrate in search for that need.
The lockdown in India last year sparked an unprecedented mass domestic migration last year and had sever consequences. In fact, the consequences were so bad that people started to plan for migration on hearing the news of 2nd lockdown.
Moving Up the Maslow's Hierarchy
While many are migrating to fulfil their physiological needs, on the other side of the spectrum we have people migrating internationally to fulfil their higher levels of needs. It was reported in The Business Times that the super rich are moving to Singapore due to its effective management of Covid. In fact, Singapore was ranked as the world no. 1 in April's Covid Resilience Ranking.
Though being ranked as one of the safest countries in the world during the pandemic, living in Singapore still have its restrictions. As such, some of the richest decide to move to countries which are safe, yet have less restrictions. The ultra-rich who were frustrated with the restrictive Covid measures are moving to cities/countries with less restrictions. It was reported that the ultra-rich are moving to Dubai as everything is "business as usual" there.
What does this Mean to Property Owners?
As shared in our earlier article, prices of investments (including properties) are driven by "demand and supply". These migrations will definitely cause a shift in "demand and supply" of the properties in these areas. If you have access to properties in areas where there is an outflow of people, this is the best time to buy. The demand would fall and supply would increase, hence we can expect property prices to fall. If you are holding to properties in areas where there is an inflow of people, e.g. (especially private, luxury properties) in Singapore or Dubai, this is the best time to cash in. In Singapore, private properties are soaring and continuing to soar.
If you are unfamiliar with real estate transactions, it would be good for you to engage a property agent. If you feel that you are not ready but have interests in property investments, start building your real estate network today. If you don't know where to start, stay tuned on our website; we will be sharing an easy way to build your own property network in a few weeks' time!