Real Estate Appraisal in the Aftermath of the Coronavirus Pandemic

Abstract

In February 2020 the coronavirus (COVID-19) begun to roll over the globe. Suddenly, some true resilience leadership – or at least, decisiveness – was needed from individual citizens and businesses. The crisis conditions also forced some sectors and industries to be innovative, in search for solutions. This contribution speculates about the future of real estate appraisal, and the extent it is being affected by the crisis. The implications of the ongoing and future virus crises for real estate appraisal are examined using the concept of risk, and, in doing so, a potential methodological innovation based on subjective risk analysis of real estate investments is argued for. The consequences are likely to fit in the space between the extreme scenarios: that nothing will change, and that all with change. So, we do not believe that the distribution of rental incomes and property values will be the same as before, but we also do not buy the claim of some kind of end of real estate. Instead, what seems plausible is to approach the issue by establishing the risk; that is to say, how the real estate industry is reacting to an inevitable resetting of the businesses of the tenants, based on how adaptable the industry and sector is. The findings of the conceptual analysis highlight the potentially changing context of real estate appraisal in terms of localization of economic and social activity; preferences for distance practices and private sector activities; and implications for investment risk.