Will the Corona Virus Affect the Rental Markets?
The inauspicious arrival of the Corona Virus last fall now contrasts with it being the top news story around the globe. The virus is trashing the stock markets and stopping international trade.
Will this hit home to us in the property management and rental industry soon? Perhaps landlords in the vacation rental sector in Asia didn’t take Covid 19 Virus seriously enough. Now it’s taking a serious toll on that sector. It’s not good news, but we should use it to improve how we do business (including cleaning and maintenance, see tips below).
Lots of questions: As infections rise globally, what affect might it have on the long term and short term rental sectors in countries such as the US, Canada, UK, Germany, and Australia? Although the numbers of recovering victims are now above new cases, the WHO continues sending out warning messages, which are spooking the investment community (stock markets are rebounding today).
It seems the virus doesn’t have to hit a region, it’s simply the threat of it happening. Landlords might be wondering which rental sectors could be hit in 2020 and how much it will hurt their balance sheets? At this point, with an undersupplied housing market and lots of job openings, there are plenty of renters available, should some experience job losses. The threat is low for now.
US Centers for Disease Control and Prevention released a statement that they expect to see “community spread” of the virus in America.
“It’s not so much a question of if this will happen anymore, but rather more a question of exactly when this will happen and how many people in this country will have severe illness,” said CDC National Prevention Center for Immunization and Respiratory Diseases Director Dr. Nancy Messonnier — CNN news Report
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Corona Virus Now in Europe
The news about the easy spread in Europe (Italy), Middle East (Iran) and Asia (South Korea) is concerning. Not only for persons affected, but financial experts are concerned about the implications for trade, commerce and at some point, employment.
The threat has already hit Australia as tens of thousands of vacationers canceled their hotel, airbnb, and flight bookings. They’re fearful of traveling by train or jet. And Australia is highly dependent on China trade. The full rental housing market in Australia could be impacted.
Corona Virus Hitting Hong Kong Rental Market
South China Morning Post reported that rental transactions are down 10% in Hong Kong. In December, some Hong Kong neighborhoods have seen rents fall as much as 11%. However, this may just be the effects of the protests which are still ongoing.
Add on Corona Virus, and the numbers heading into March might be grim for Hong Kong landlords.
With economies plunging and employment threatened, it could mean income losses loom for tenants, and rent defaults for landlords on the rise. Long term rental landlords could see increases in vacancies.
Corona Virus In China
The latest death toll in China is pushing toward 2700, with 80,000+ infections.
If we use China as our model, their economy is plunging. Workers were shut out of factories in South Korea and other tech manufacturing countries. China is allowing workers to return to work slowly, but they must be worried about the virus transmission that might happen.
Canada, USA, UK Implications
Our governments appear confident they can detect and resist the virus. In 2004, the SARS epidemic was contained fairly well, so we’d have to think that the US, and Canada might be spared from this disease.
However, Covid 19 as it’s called is more virulent and spreads fast. There is a certain mystery about how it is contracted by humans. Should we be skeptical any claims about prevention by health authorities. A new study says the virus incubation period might be as much as 24 days.
How to Prepare for Novel Corona Virus
Since the Novel Corona Virus spreads via surfaces and air borne particles, apartment buildings could be grounds for transmission. The spectre of a building lockdown should be enough to encourage all landlords and maintenance staff to make cleaning a priority.
Prince Cruises Seeks Good Cleaning Team — “Princess Cruises announces global search for best-in-class cleaning and disinfection provider — story in Washington Post.”
Tips for Disinfecting for the Corona Virus
The CDC makes a distinction between cleaning, disinfecting and sanitizing. Disinfecting is the most important as it uses chemicals to kill germs and viruses. Few transit systems, libraries, community centers, grocery stores, sports stadiums, or other highly used facilities offer hand cleaning dispensers, so you may have to ensure each entrant to your building can clean their hands right away. This may be your top defense.
Follow these tips to reduce the potential spread in your apartment building:
- use best commercial grade cleaners for long lasting virus prevention. This report says natural germ killers don’t work as well
- chemical treatments which contain 62% to 72% ethanol, .5% hydrogen peroxide, or 0.1% sodium hypochlorite are best
- lysol and other cleaners may or may not work effectively, but with other measures might be okay
- focus on heavy use entry way doors, elevators, hallway doors, and any public washrooms
- install hand cleaner dispensing units in public areas
- supply tenants with high grade cleaners if they need them – it helps send a serious message
- clean common areas and washrooms frequently during the day
- ensure your building’s hvac/heating system filters are good quality and replaced more regularly
As a landlord and property manager, you can do much to prevent the spread of viruses and diseases in your buildings. Your cash flow, and balance sheet might be affected one way or another by economic threat of the Corona Virus.
Keep your premises sparkling clean and keep your tenants reassured about living in it!
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