In that category, don’t forget all the homes and apartments dependent on tourism through Airbnb and other short stay operators. Occupancy is down and rates are falling, by 15 per cent in Byron Bay according to a report in The Australian Financial Review this week.

If such homes are highly geared based on short-stay income, their owners could struggle.

Another challenge for housing investors would come if their tenants contracted COVID-19. What disclosures would be required? And who would pay for, and guarantee, the cleaning.

So far house sales seem to have avoided any negative impact, likely due to the interest rate sugar hit.

But JPMorgan warns that “falling consumer sentiment may stall the residential recovery as potential purchasers begin to worry about job security".

In the traditional commercial market, retail is the most exposed, particularly retail dependent on discretionary spending.

Already a number of tenants are asking for rent abatement, as Vicinity Centres noted when downgrading earnings in February.


But as the crisis spreads this challenge will harden. Some retailers will be forced to close locations all together. Will the good operators be granted full rent relief so they are in place when the economy opens again, hopefully in a rush? It might be less costly than finding a new tenant.

Mixed messages on co-working

The office sector seems more insulated, though business is likely to make few decisions in the face of the epidemic. JPMorgan warns that co-working and the (surprisingly significant) university demand will likely evaporate, and sub-lease space pick up.

Already, serviced office veteran Servcorp has reported a 30-40 per cent fall in co-working sales this year, though the shift could be offset by an increase in virtual office sales.

Other co-working operators have reported an increase in demand as major corporates split their key finance and payment teams and relocate one of the split teams, not to home, but to a co-working location.

Industrial property seems the most insulated but it could be affected by supply chain disruption. Already new tenant demand for logistics property appears to have slowed.

JPMorgan also says major sales could be affected by travel restrictions and uncertainty about asset values. With interest rates and the Australian dollar so low, the evidence is yet to emerge.


The construction industry, which now sources so much of its material from China, could slow. If workers on individual sites contracted COVID-19, the slowdown could turn to shut down. No one can build from home.

In finance, even though the interest rates have fallen, few would be surprised if lenders became more risk averse.

Reserve Bank deputy governor Guy Debelle noted the recent rise in corporate and bank bond spreads in his speech to The Australian Financial Review Business Summit, though he seemed little concerned about a shift which is still benign compared to the blowout that occurred in the GFC.

Another warning came from Martin North of Digital Finance Analytics, who reported that a number of potential borrowers who believed they had a provisional loan commitment had found that the lender had priced the loan higher or withdrawn the offer completely in recent days.

“Something weird is happening to the mortgage market judging by the bevy of messages I have received in recent days,” he wrote on Tuesday.

Ultimately, many property businesses could face the visceral challenge of a coronavirus contact.

“The industry leaders are liaising collegiately and regularly on what needs to be done, and not done, to ensure a common-sense approach and response to the coronavirus issue,” says Stephen Conry, JLL’s chief executive in Australia and national president of the Property Council.


JLL Australia chief executive Stephen Conry says the company is focused on the wellbeing of staff and the buildings that hold them. Peter Braig

“All have an eye firmly on the wellbeing of staff and the condition of the buildings which house them.”

Everyone hopes that the impact is short and sharp, all over by the third quarter of the year and with a bounceback in the aftermath.

A changed sector, bearing some scars

But no one knows, and the disease will leave longer-term impact, including some scars.

Property Council of Australia chief executive Ken Morrison supports the Morrison Government's aim to use its support program to improve productivity.

Most likely the coronavirus will, in the long run, hasten the introduction of technology into the property sector.

Global real estate group CBRE made the point in a special report on COVID-19 published earlier this month.

In the office sector, the group expects the potential long-term impacts to include the accelerated adoption of of flexible working, the re-evaluation of business continuity planning and enhanced workplace wellness measures.

In retail, the longer-term impact will be the increasing use of the omni-channel – clicks and bricks – strategy and pick-up points. And industrial real estate is likely to see yet more automation in logistics.

First, the industry has to negotiate the immediate storm.