Supply-chain issues are still rippling through some U.S. and global markets, while others are showing marked signs of improvement. In Singapore, supply disruptions persist, as underlying factors such as the Ukraine war and China’s relatively strict Covid policies remain, says Han Huan Mei, director of research, List Sotheby’s International Realty, Singapore. “Further escalations in the Russia-Ukraine conflict could further impact global supply disruptions and exacerbate inflationary pressures through higher food and energy prices.”
In the U.S., the city of Seattle, Washington, offers a good example of the many changes and challenges brought on by the Covid-19 pandemic.
Between 2010 and 2020, downtown Seattle was the fastest-growing large city in the U.S., with more than 27,000 multi-family housing units delivered, but the “pandemic created many direct and indirect headwinds to the pipeline,” says Dean Jones, principal and owner, Realogics Sotheby’s International Realty.
“Inflation and supply-chain issues resulted in hard costs of 30% higher than pre-pandemic, and developers still report challenges getting certain products from overseas,” Jones says.
Also, construction financing has gotten tighter, and rents have “skyrocketed based on the supply and demand imbalance, but landlords still suggest the higher cost of operations isn’t keeping up with rent growth,” he says.
As a result, “developers aren’t so much changing their product offering. They simply aren’t breaking ground,” Jones says. There are no plans for new development delivering in 2023, one in 2024, and none in 2025, he says.
Read more on how real estate markets are reacting to global supply chain issues at LuxuryOutlook.com →
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