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The Impact of Covid-19 Pandemic on Value Migration Processes in the Real Estate Sector

Author

Listed:
  • Kowalski Michał J.

    (Faculty of Management, Wroclaw University of Science and Technology, ul. Wybrzeże Stanisława Wyspiańskiego 27, 50–370 Wroclaw, Poland)

  • Wang Tong

    (Architecture and the Built Environment, Delft University of Technology, Mekelweg 5, 2628 CD Delft, the Netherlands)

  • Kazak Jan K.

    (Institute of Spatial Management, Wroclaw University of Environmental and Life Sciences, ul. Grunwaldzka 55, 50-357 Wroclaw, Poland)

Abstract

The COVID-19 pandemic period brings huge uncertainty, especially for the real estate sector. On the one hand, restrictions on the mobility of a population, decline in travel demands, popularization of remote work and education models caused doubts among investors questioning the future of the sector and the functions of real estate. On the other hand, the large supply of cash after the first waves of the pandemic and the upcoming increase in inflation resulted in many investors boldly investing cash in real estate, considering them as assets of stable value. This research aims to analyze the processes of value migration among real estate companies listed on the Warsaw Stock Exchange during this turbulent process. We analyzed the changes in the main drivers of value and the migration rates of the real estate sector based on data for 2018, 2019, 2020 and Q3 2021. The first period of the pandemic is the time of the collapse of the main profitability factors, sales and profitability of sales decline in the entire sector. However, the financial pillars of the analyzed companies are stable and we are not seeing signs of liquidity problems or a significant increase in debt. The second year of the pandemic is a significant reflection of most of the drivers of value, often to levels higher than those observed before the pandemic. Investors seem to remain insensitive to turbulent changes in accounting measures of effectiveness. We observe the relative stability of market measures. The processes of the migration of values from and to the sector do not show significant changes when comparing the periods before and during the pandemic. We observe various intensities of the studied phenomena in various groups of the real estate segment.

Suggested Citation

  • Kowalski Michał J. & Wang Tong & Kazak Jan K., 2023. "The Impact of Covid-19 Pandemic on Value Migration Processes in the Real Estate Sector," Real Estate Management and Valuation, Sciendo, vol. 31(1), pages 10-24, March.
    • Handle: RePEc:vrs:remava:v:31:y:2023:i:1:p:10-24:n:6
    DOI: 10.2478/remav-2023-0002
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    References listed on IDEAS

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    More about this item

    Keywords

    COVID-19; real estate market; value migration;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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