The black swan of 2020, Coronavirus - aka COVID-19 - has had a dramatic global impact since the first cases were reported in China in December last year.
It has since spread to almost every part of the world and is seeing cities go into lockdown, major events cancelled and 14 day self-isolation measures deployed for anyone with symptoms or returning visitors from the most affected areas.
It is the uncertainties produced by 'black swans' that send markets into meltdown. And whilst in the short term activity within the rental market will shrink it is relatively certain that it will be followed by an influx as confidence returns, travel restrictions are lifted and renters once again look to find new homes.
However, with the outbreak now firmly established in the UK, what are the potential challenges to the operation and lease up of BTR schemes in London and what countermeasures can be deployed to mitigate the impact?
Home Made have been working with current clients to offer guidance on how to identify where the pinch points will be and offer solutions on how to minimise the consequences of the spreading effects of the coronavirus – many of which can net strong returns and are sustainable long after the short term crisis is over.
Marketing and Operations
The lease up and operational management of new and existing schemes are likely to be immediately impacted by the ‘delay’ coronavirus initiatives.
Now ‘population distancing’ strategies have come into play it will be likely that, in the short term, demand falls significantly as people are less willing or able to travel for viewings.
In the short to mid term, with working from home policies in place, on-site teams will become depleted and facilities management may suffer from resourcing and supply chain issues. Add to that the question of what to do if identified coronavirus cases are found within your building and what the implications could be on your brand.
Irrespective of the fact that they may have been some months in the planning, it is highly likely that current strategies may now not be fit for purpose.
How can you take steps to ensure you can weather the storm and turn some of the difficult challenges into opportunities?
Review all strategies
However strong your marketing plans are it is now likely you will need to look at how you can diversify your marketing channels to generate demand.
Notwithstanding the aforementioned challenges posed by fewer people travelling to view properties, in any time of uncertainty precedent shows that people are more likely to extend their tenancies than move.
If your strategy is heavily reliant on channels that draw on key sectors and/or demographics they may now be insufficient.
These would include:
- International students (especially from China)
- Large group bookings
- Corporate or relocation lets - companies are likely to put these on hold
- Short lets - no one is going to travel now so this market is going to shrink considerably. (A knock-on effect will be increased supply against diminished demand)
If your strategy relies on traditional marketing models which are now highly vulnerable, it is critical to look at adopting other tech-based solutions which can facilitate digital engagement across both demand creation and the customer journey.
This should include:
- The ability to conduct video viewings or virtual reality walk-throughs.
- An end-to-end digital process for tenancy application (except Right to Rent).
- Cross channel digital communication methods (WhatsApp/WeChat/ etc.)
CAC (Spend ROI):
Even if you have a well-developed ATL/BTL marketing plan costed and in place, as demand shrinks and supply increases your cost to acquire your customer is going to increase.
Reviewing plans to focus on ROI is vital to minimise the impact on NOI in the short to mid term.
- Tube/bus traffic is likely to reduce significantly, so with an already heavy outlay and already difficult to quantify ROI, costs can be saved by reducing spend on ATL strategies.
- Traditional digital strategies will increase in cost substantially as the space becomes more crowded and:
- more players competing on the traffic as other channels close down
- traffic sources become less differentiated e.g. all from the UK
- renters are exposed to twice the number of advertisements leading to lower conversions
Adopting an innovative, broad cross channel BTL strategy that can be closely monitored to track ROI will maximise spend effectively with a clear customer acquisition cost. Having the support of an expert team to action this will be invaluable to sustain demand and avoid spiralling, ineffective spend.
Whilst challenging, this is a fantastic opportunity to showcase the strength of your brand and community by demonstrating that you're willing to go above and beyond to keep them safe.
Proactive and reactive strategies should be put in place to demonstrate how you will support staff and residents to;
- try to prevent an outbreak within the building and, or:
- deal with an outbreak within the building,
whilst maintaining standards and guarding against any potential health and safety issues.
- Cleaning - increased measures - daily deep clean/sanitisation of all communal areas; lifts, staircases, intercoms etc.
- Install hand sanitisers throughout the building
- Review community events schedule - consider closure of communal spaces and/or postponement of communal events
- Contingency for parcel delivery/collection
- Provide masks to staff
- Provide information flyers and/or digital content in multiple languages to reassure and explain procedures to try to prevent an outbreak in the building.
- Engagement with local health authorities to understand testing procedures
Resourcing and supply chain:
- Maintenance issues: prepare for any potential supply chain issues from both an M&E and FM perspective. Check where you currently source parts and products from and have a contingency plan for if these fail i.e. lifts, electricity, cleaning materials, etc
- What does it mean to the building infrastructure if all residents stay in - e.g. broadband, electricity, lifts, etc
- Staffing issues - how to maintain standards with a reduced staff:
- White label support
- Increased telephone support
Confirmed case(s) within the building:
- Provide information flyers and/or digital content in multiple languages to reassure and explain procedures
- Plan for how to care for any self-isolating or confirmed cases within your communities:
- Food deliveries from lobby to the apartment itself
- Daily contact
- Free movie subscriptions
- Digital engagement - video games/buddy up’s/cooking rotas etc.
Whilst arguably a last resort strategy, (as the long term consequences will outlast the impact of the virus), it will be important to monitor the pricing in the market and it may be necessary to review the pricing in the short term.
Whilst times of crisis are never easy to navigate they do provide an opportunity to look at new ways to grow market share and can be a fantastic way to emphasise your brand values and build stronger communities.
How can Home Made help?
Home Made are a proptech lettings company with highly advanced digital technologies to support a seamless customer journey and extensive cross channel marketing strategies to both create and drive demand.
With personalised video viewings available, a digital tenancy progression system in place and bespoke marketing strategies across up to 40 different channels, we can:
- sustain a level of demand and enquiries for schemes in lease up
- progress virtual viewings through to offer agreed and full tenancy progression (payment of intent, referencing, deposit etc.)
- optimise and manage your CAC
To talk to us about how we can help support you with our range of innovative solutions contact us today by emailing @[email protected]