EFFECTS OF COVID-19 ON THE REAL ESTATE INDUSTRY

Abstract

COVID-19 came about in 2019, bringing with it many changes to the real estate industry globally. This project analyzes the pandemic's effects on residential and commercial real estate transaction prices based on the number of daily cases, with a focus placed on Singapore in the dataset analysis. This study has found that COVID-19 has a generally positive effect on property transaction prices psf, with the Residential Market showing a correlation of an increase of 1.74% per 1000 increase in daily COVID-19 Case on Ln(Price) (transacted property price per square foot) and the Commercial Market showed a correlation of 4.63% per increase of a thousand cases. This study has also found that the various independent variables used in this study have resulted in either a suppressing or encouraging relational impact between Ln(Price) and the daily number of pandemic cases. By conducting further analysis on the correlation between case numbers and Ln(Price), it is shown that there is either a positive or negative correlation between the two variables, based on whether the cases occurred during a peak period of the outbreak in 2021. While the pandemic usually has a positive impact on price due to its’ constriction on construction, during the peak outbreak of 2021, it is estimated that COVID-19’s suppressive effect on demand was stronger than the effect of supply constriction which resulted in a negative impact on property prices. Lastly, this study shows that the prices of larger properties benefit more from a surge in pandemic cases, due to the greater need for space. This study contributes to existing knowledge on the economic consequences of recent worldwide phenomena on the real estate industry. There is relatively sparse literature on the correlation between the pandemic and commercial real estate market, which this study can supplement on.