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- Jefferies surveyed over 5,500 people worldwide to determine how COVID-19 has impacted life and how it will continue to in the future.
- The investment bank sees healthy living and home improvement being huge parts of life going forward, and eating out and traveling much less.
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How has the coronavirus pandemic impacted the world and what changes will be long term?
Jefferies, a financial services company, issued a report on September 10 using answers from a survey of over 5,500 across 11 countries: USA, China, Japan, the UK, France, Italy, Germany, Spain, Hong Kong, India and Australia. It asked consumers a variety of questions on subjects including how long will people be working from home for and how responsible companies have acted.
Based on the consumer-attitude data, Jefferies highlighted six predictions they have on how COVID-19 will impact the future — and they all have big implications for real estate.
These predictions hover around the importance of being inside and avoiding crowded spaces, like restaurants and movie theaters. More specifically, the survey found people are expected to continue to spend an abundance of time at home.
1. Healthy living will continue to hold importance
As a result of the pandemic, Jefferies believes that people will continue to pursue a healthy lifestyle.
“Never in our lifetimes has the importance of personal health and hygiene been thrown into sharper relief,” the report reads.
The report goes on to explain that the industries likely to be negatively impacted by this prediction include tobacco, fast food, and convenience stores. On the contrary, personal care, fitness, and health foods will benefit.
2. There will continue to be a rise in the need for home improvement
Social distancing and stay-at-home orders have forced people to rethink their living situations. And home improvement is expected to continue to hold importance.
“Spending more time at home, we ramp up home improvement,” the report reads.
Sectors that will likely benefit from this, per Jefferies, include home security, homeware stores, and home technology. On the contrary, those at risk include recreational products and recreational activities.
3. People will continue to opt out of taking public transportation
As Jefferies explains, public transportation is a health risk in a time of social distancing.
“Encouraged by environmental regulation, consumers buy electric vehicles at a rate not seen since the after-war period,” the report reads.
While the auto industry, like car rentals, will likely benefit from this prediction, per the report, buses, railroads, and ride sharing will hurt.
With public transportation becoming less desirable, some may argue that cities will continue to lose residents to more suburban-like markets.
Bloomberg reported that at the end of this past March, just 10% of the typical 5 million daily New York City subway riders made weekday trips. However, that still works out to 500,000 trips a day, quite a lot considering it was during the height of the city’s outbreak.
4. Virtual entertainment will trump in-person entertainment
“Fear of public spaces keeps fans away and the temporary moratorium on concerts, theme parks and movie theatres becomes semi-permanent,” the report reads.
Jefferies predicts that TV will become more valuable, and online will become the stage for much of entertainment. Theme parks, movie theaters, casinos, and concert venues are all expected to be negatively impacted.
5. There will be less dining out
With the fear and challenges of social distancing that come with dining out, Jefferies believes that eating at home will increase “indefinitely.”
Inevitably, restaurants will hurt from this change while grocery stores and food delivery services will benefit.
6. Business travel will diminish
“Health, safety and sustainability concerns make business travel, broadly speaking, a thing of the past,” the report reads.
Instead, virtual conferences will continue to grow in popularity, while airlines and hotels see a dip.
In 2019, around 30% of US travel spending was for business travel, which translates to $334.2 billion in spending and about 2.5 million jobs, Business Insider previously reported. Executives across the country told Business Insider that the pandemic has forced them to reevaluate business travel, and they have found that in-person meetings are often unnecessary, thus traveling for business may not be as valuable anymore.
Takeaways for real estate — single-family housing set to dominate
The survey results support the newfound importance of single-family housing, which went from being phased out and deemphasized by local governments around the US, even in early 2020, to leading housing’s strong performance during the pandemic.
Simply put, single-family housing tends to entrench inequality, as more single-family developments keep housing costs higher than higher-rise developments, plus they’re bad for the environment. But they are ideal for social distancing during a pandemic.
In a late August report, UBS cautioned that not all people leaving the city are buying homes — some are renting or hiding out in their second home until the city returns to normalcy. The report predicts that, among other things, a sense of normalcy will return to dense cities, along with many of the people who have left.
However, UBS also noted that workers for companies based in expensive cities like New York and San Francisco may genuinely not need to go back. They may be able to work remotely on at least a mostly permanent basis, thus single-family homes could be further entrenched as the dominant real estate investment.
Eric Brown, a luxury real estate agent in New York, told Business Insider he doesn’t see implications caused by COVID-19 impacting the high end of the city’s market long-term.
“At the end of the day, people want to be in New York. I have people who have certainly left for one to two months, six to seven months, or they’re not planning to return until 2021, but a majority of my clients are coming back. New York is a five-minute city,” he explained.
Brown said he sees buyers at the high end are looking for three things, which closely resemble the fashion for single-family homes, but in an urban setting: boutique developments, more indoor space, and some outdoor space. The future for many is going to be in the home, and New York’s high end is adapting to that, he said.