Robert Shiller, Nobel Prize in Economics, in an interview with Bloomberg, said he believes we are going through a situation similar to the era of discovering nuclear weapons. In 1949, when the Russians first tested the atomic bomb, there was an exodus to suburban US regions. It was thought that the big centers would be the first targets in a possible nuclear war. The current moment has some similarities, according to Shiller! Large centers are also those with the highest infection rates. The urban exodus is already happening and everything indicates that it may be a post-covid trend.
It is not just the fear of the virus that motivates residents to leave large cities. According to Shiller, the main factors that make urban regions desirable refer to the focus of agglomerations, such as dining in good restaurants, going to the movies, attending concerts, bars and night clubs. This type of entertainment loses its appeal in the midst of the pandemic. “It is possible that there is a transition to the countryside, especially if you are working from home – if this becomes the new normal, you will not have to worry about commuting,” says Shiller.
Shiller adds that, even with a mass migration, property prices in these suburban regions would not be so pressured, since there is plenty of land for new construction. This thought, however, has proved wrong in the past, mainly in central Florida, around Orlando.
Orlando’s suburban regions and cities, in the so-called Greater Orlando, despite offering large free areas, were not able to cope with the great worldwide demand for properties in the region. With a growing flow of tourists and professionals to the region (more than 75 million people visit Orlando every year), the so-called Vacation Homes have become the ideal investment for those looking for a return on rent in dollars. Until today, local construction companies have not been able to satisfy the existing demand. And every year the flow of people to Mickey’s Land just increases.
Florida real estate market already sees transformation
In the state of Florida, which entered Phase 2 of reopening on June 5, this transformation in the behavior of residents and investors is already visible.
The flow of people therefore also takes office spaces away. Raoul Thomas, CEO of CGI Merchant Group, a private equity firm based in the Brickell neighborhood of Miami, is betting on the growth of corporate satellite spaces in suburban regions. The new work format would transform the satellite offices into a point of support for employees and collaborators, who will also be able to work in their homes, with a better quality of life and protected from agglomerations. This trend is already seen in Asian countries, which were the first to suffer from the coronavirus crisis. In the article Home Office and the future of corporate spaces we comment more about that.
Central Florida Region: Average Orlando home price rises 7%
Central Florida has seen an increasing demand for single-family homes. The region was practically invaded by residents of New York, the city most affected by the virus. Homes for sale around Orlando, in cities like Windermere, are the most desired.
According to a report released by the Orlando Regional Realtor Association, the average price of real estate in Orlando increased by 7% in May 2020, compared to May 2019. Even in the midst of a pandemic, the market remains consistent.
The trend of urban exodus is already seen in many countries during the pandemic. Asian economies were the first to install satellite offices in suburban regions, to support their employees and collaborators, who started to work, most of the time, in the home-office format. In addition to the US, Peru, India and some African countries also follow the same trend.
In Brazil, XP Investimentos has already declared that flexibilities in the work format and the adoption of the home-office in its operations may become permanent. XP is also considering building satellite offices in the interior to support its employees and collaborators.