The global economy has been turned upside down by novel coronavirus. In the modern world, no one had seen anything like this. Covid-19 didn’t just hit the health of individuals. Since March, millions of U.S citizens have filed for unemployment or bankruptcy. Economics projections are looking very grim. The unemployment rate is lowering to the levels not observed since the Great Depression of 1929. State and federal governments timely enacted emergency measures. They had the businesses across industries comply with mandatory closures. Despite that, several estimates report job losses to be near 50 million and GDP contraction in the second quarter at up to 25%.
Initially, Coronavirus’s adversely affected the hospitality industry only. But more recently, all sectors of the real estate and construction industries are experiencing the full force of Covid-19 at varying degrees.
We have to adapt and find ways to minimize the financial consequences of this pandemic. Ascertaining lost revenue and income originating from these extraordinary circumstances is a good start. All real estate and construction companies should prepare as if the spread will continue, only then we can hope these calculated measures will flatten the curve. How do we do that? Owners of property businesses must take inventory of their exposure, consider potential scenarios, and develop a solid plan that is based on communication and human compassion.
How Real Estate And Construction Leaders Can Act On And Evaluate The Coronavirus Risk Profile
1. Risk Assessment
To ensure business continuity, you have to conduct a risk assessment. In order to that, real estate companies like any other are advised to evaluate the most current facts from reliable sources. It will help you identify potential operational, financial, and market risks. You will be able to determine the direct and indirect impacts of Coronavirus on your venture and generate an action plan.
2. Improved Communications
In the wake of coronavirus risk to your business, it is important to carry out clear and consistent communications. The key protective measures that your employees and clients are taking should reach the ears of internal and external stakeholders along with their surrounding communities. It will maintain the goodwill of your company.
3. Check If Leases And Contracts Need To Be Revised
Workforce, debt covenants, and many other factors can disrupt the operations of your construction company. You will need to identify the impact of those on any service, supply chain, or lease abatements. Determine the extent to which your contractual language will lessen the financial effects of the coronavirus outbreak.
4. Explore Your Legal Rights
It’s a must for construction and real estate companies to formulate a strategy for enforcing legal rights. While it may well be within your scope of influence to enforce your rights as mentioned in your contracts. But, you should also consider, as an expedient to what may be an overtaxed judicial system, taking advantage of any federal, state, or local government laws that can favor your venture amid high Coronavirus risk.
5. Immediately Devise Ways Of Recovery
A plan of recovery is the best way to cushion the bad impact of coronavirus on Real Estate & Construction companies. Resources will be stretched thin for the near future. So, you will need to establish achievable milestones for recovery. It is crucial that you create incremental goals that are realistic, and hold all of your staff accountable for steering the course to accomplish them in time.
6. Monitor Announcements
Federal, state, and local governments are regularly issuing notices that may be in regard to your real estate business. Varying potential impacts and regulatory changes could be coming down the pike for your firm. It is important to note that the WHO and the CDC are continuously determining the factors that may hinder your venture’s evolution in the market.
7. Be Mindful Of Changes In Accounting Implications And Total Tax Liability
The actions taken by local and national governments will have a great effect on your total tax liability depending on your individual company circumstances. It’s only smart to keep up and adapt to the situation to save or spend where you can for the better.
8. Look Into CARES Act
The Coronavirus Aid, Relief, and Economic Security Act was introduced on March 27 this year in response to economic fallout due to the Covid-19 outbreak. Evaluate and check if your construction or real estate company can benefit from the CARES Act, including SBA forgivable loans and payroll credits. It is advised to consider this option as it is open for all Americans.
In conclusion
Checking the boxes off this list can enable you greatly to make well-informed operational and strategic decisions. It will balance the risks inherent to an infectious disease pandemic. Other than that, you can utilize the intel compiled from your self-evaluation. Your real estate or construction company can build capabilities over time and support the business case for future investments in resiliency.
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