COVID19 – impact on luxury rentals. Times are tough out there and the luxury rental market is no different.
With COVID-19 causing worldwide disruption, tenants here in Vancouver are no exception to the impact of this pandemic. The onset of unplanned unemployment, reduction in monthly income, the interruption of travel plans and government subsidies are just some of the effects felt. This has caused an overall reduction in the amount of tenants currently searching for new rental property. With this reduction landlords have now become more willing to offer incentives and promotions in order to fill vacancies for their property. An interesting takeaway has been to see however looking at the data being released is the relative inelasticity of rents for property below 3000 a month. This is primarily due to the fact that Vancouver, despite the onset of a worldwide pandemic and the slow down associated still does not have enough rental supply to service the base load demand pad in Vancouver.
Where we have observed flexibility and discounting has been primarily focused on the high end luxury rental market. Fewer tenants participating at that price threshold to begin with, with the added drop in consumer confidence. This is a classic recipe where fewer participants are vying for more product which gives them more choice. Decreasing demand, results inevitably to having rents impacted as the supply has remained constant.
With fewer tenants, landlords who own luxury property are forced to make decisions.
Vacancy is the costliest tenant, so reduced rents become the result.
Stay posted, I am finding this is an unfolding situation and am certain things will continue to change. The pandemic and the effects it’s having on the real estate market will likely continue for some time still.
As always, for more details or to offer further context I would highly recommend calling me directly at 604-209-0081 or emailing me at baxter@vancouverluxuryrealty.com where I can provide a greater understanding for clients who might be interested in learning more.
COVID19 – impact on luxury rentals
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