The COVID-19 pandemic has spread uncertainty throughout our lives. This is true for the real estate market as well. Everything has stalled, and everyone is waiting to see exactly what the “new” pricing structure is going to look like.
Sellers are currently willing to concede discounts of around 5%, while bidders are hoping for about 20% off pre-pandemic prices, said Charles Hewlett, managing director at Rclco Real Estate Advisors. That estimated gap, which is likely wider in specific cases, has put a freeze on deals.
The other side of this is that there is a lot of cash waiting to be used. According to the data firm Preqin Ltd, private equity firms hold an estimated $328 billion ready for real estate deployment.
Until shopping, commuting and travel become routine again, it will be hard for investors to agree on what malls, hotels, offices and other properties are worth.
