Real Estate, Property Development, and Facilities Management
September 26th, 2021
Real Estate Maintains its Place Despite Challenges and Lower Prices
Real estate is always still one of the best and safest places to invest your money.
INTERVIEW – ASSOCIATION OF REAL ESTATE AGENTS (AREA)
Real estate will always have a place.” So said Mark Edghill, President of the Association of Real Estate Agents (AREA) as he spoke on the real estate sector’s survival during the COVID-19 pandemic. He noted, “If economies are collapsing, people need to liquidate their properties – there will always be people there looking for the opportunity to take advantage of prices being low.”
How has the pandemic affected the sector?
The AREA President added that the pandemic has affected people’s buying power. “It has affected people’s jobs so there has been some shifting in terms of who has job security that can qualify for mortgages if they are interested in buying, and most of those are in the below three-million bracket.”
Pointing out that the commercial sector has been terribly impacted upon, Edghill noted that there have been many business closures in the retail sector so a lot of retail and office space has become available. “Even pre-COVID, commercial rental space was high,” said Edghill, “but since COVID, the commercial sector, in particular, has been very hard hit and we are still looking to the end of the pandemic to say exactly what percentage of businesses is going to resume operations close to what they were doing before, or if a lot of them are going to be implementing work-from-home and virtual platforms. That seems to have been working for people during the last year.”
He explained that some jobs still require attendance at an office so the sector may see marginal downgrades in office space requirements. “On the other side, based on the social distancing and the health and safety requirements, we may actually see certain businesses needing to expand their space to accommodate the same number of employees.”
People’s buying power and ability to pay a mortgage have also been affected. “We don’t know the impact of COVID on businesses and how many closures there will be or what the unemployment level will look like. The Government is not in a position financially to help so we are going to feel the brunt of the effects of COVID economically, after the fact” Edghill said.
He further pointed out that prices have come down between 10% and 20% already because of the high volume of people vacating properties due to unemployment. “Because of the increasing inventory in properties for sale and rent, the competition is high, inventory is high so prices would have come down because it is more competitive,” he said, “so we don’t expect a collapse of the real estate sector because, in the long term, real estate is always still one of the best and safest places to invest your money to mitigate inflation and devaluation.”
Future Challenges for the sector
And while he sees the sector not collapsing, what does he foresee as challenges impacting it post-COVID? “I think we will still see a lot of use of virtual platforms for marketing purposes and for property viewings,” he said, “but I don’t see that necessarily as a challenge because that is to the benefit of all parties.”
However, he expressed concern over the banks’ position when providing assistance. “So far, their assistance has just been to defer payments with interest…the bank is not sharing the losses being incurred by its customers.”
The AREA president recommends that banks step up and realise it is a time when they also need to compromise on their income and their profit. “Instead of having deferrals have forgiveness and suspension of payments without additional charges or interest to the mortgage customer/homeowner to assist them in their recovery as well because, in the long term, their recovery means they can maintain their payments to the bank.”
Significant initiatives in the sector
Despite the pandemic, several significant initiatives in the past year help to give hope for the sector. “We have aligned ourselves through an international bilateral agreement with the North American Association of Realtors and that links us with 1.2 million brokers globally to give us the ability to market Trinidad and Tobago and our real estate market to potential investors and prospects internationally with the hope of attracting direct foreign investment which is crucially needed and US-dollar buyers.”
Another significant initiative for the sector occurred in June 2020 with the passage of the Real Estate Brokers Bill which puts regulation and structure to the real estate sector. This now requires registration and licensing so the public will be protected from people who are not trained or qualified to represent them as real estate agents.
What is in place for Trinidad and Tobago to tackle affordable housing deficit and expanding commercial real estate?
Edghill pointed out, “I think we have been consistently increasing in our prospects and projects to handle the housing issue in Trinidad. Middle-income housing has been a focus over the last six or seven years and there are many projects that are targeting the middle-income bracket which are still incomplete, so that sector has been receiving a lot of attention and it is still very dependent on job security.” While a lot is uncertain due to the pandemic, one thing that is sure is the real estate sector’s place.
INTERVIEW – ALLIED SECURITY LIMITED
The Ministry of National Security received an allocation of $5.227B in the 2021 budget. This is $1.217B less than the previous year but while the financial allocation decreased, crime also seemed to decrease. There was a 30% reduction in serious crimes in 2020 compared to 2019. This was according to Commissioner of Police Gary Griffith in an address at the start of 2021. He pointed out that is the highest percentage reduction in crime from one year to another in over 30 years.
Griffith said in 2019 there were 539 murders, adding, “As I speak today, we are at 395 murders for this year – which is more than a 25% reduction in murders, the lowest murder rate in eight years.” He said there has also been a 41% reduction in kidnappings and a 70% reduction in kidnapping for ransom.
Selvonne Mitchell, Deputy CEO of Allied Security Limited, expressed similar sentiments noting that for 2021 thus far, he has not seen a major increase in crime during the pandemic. “We do vigilance response for 4,500 persons and we have not seen any increase in home invasions and robberies.” He disclosed that he has seen an increase in pilfering of Telecommunications Services of Trinidad and Tobago Limited (TSTT) cables possibly for copper – TSTT is one of Allied’s clients.
Aside from criminal activity, how has the pandemic impacted the Security industry? Mitchell noted that the pandemic had no major impact on the industry. He stated, “We are a security company and being part of the essential services, we continued working as normal. The only negative impact would have been that some of our clients’ businesses were closed and that resulted in a decline in revenue to some extent.” Consequently, this has caused a small decline for security, so Mitchell is now tasked with the challenge of assigning work to surplus workers trying to divide the number of hours among them, not wanting to send anyone home.
Another challenge brought on by the pandemic, one which Mitchell describes as “insignificant really”, is that the company now has to employ a number of sanitation systems – sanitizers, fumigation, personal protective equipment for the officers. This has affected the company’s revenue but in a small way.
So, how does Allied Security intend to move forward? Mitchell explained, “Generally, in the industry, our focus is on being vaccinated. However, one challenge we may have is the absence that stems from an officer being unvaccinated. I had about 13 (out of approximately 750 workers) or so officers who would have been quarantined for a period of time and therefore unable to work – so officers not being vaccinated can affect us.”
However, Mitchell expressed that the industry plans to deal with the pandemic head-on and to keep doing what they have been doing since the start of the COVID-19 pandemic. “We also plan to continue fumigating, sanitizing and maintaining COVID-19 protocols even after the pandemic.”