Supply-Chain Issues Ease, Yet Prices Remain High
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.”
Even as manufacturing shutdowns and restrictions on the movement of factory workers are being alleviated, a certain level of global and regional disruption will persist in the short-to-medium term due to ongoing border controls in mainland China, Hong Kong SAR, Taiwan, and Japan, according to a recent report from CBRE, a global leader in commercial real estate services and investments.
Over the past two years, manufacturers, omnichannel retailers, and logistics companies in Southeast Asia have moved from a “just-in-time” inventory approach to a “just-in-case” model that requires them to keep large volumes of stock on hand as a buffer to potential disruption.
“ The government also has provided extensive assistance to help contractors complete ongoing housing projects in a timely manner.”
Han Huan Mei Director of research, List Sotheby's International Realty, Singapore
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.
In New York’s Hudson Valley, Raj Kumar, associate broker, Four Seasons Sotheby’s International Realty, says his personal experience is that supply-chain shortages have been alleviated somewhat. However, “prices for both materials and labor are significantly higher, with materials going up more than labor costs.”
In the Jackson Hole, Wyoming, market, “it’s gotten much better in the last three to six months for the construction trades—the ability to get appliances and lumber,” says Brett McPeak, associate broker, Jackson Hole Sotheby’s International Realty. “There is no lumber mill here. Every piece of building material is getting trucked in from somewhere else.”
Now, he says, “it’s down to weeks to wait for something, not months or years.”
“Things are better,” says Marilyn Wright, global real estate advisor, Premier Sotheby’s International Realty in Asheville, North Carolina. “The price of construction has stabilized, but it isn’t going down. Appliances are still somewhat of an issue.”
More from the report
Don't just look for a place. Discover a home.
© 2023 Sotheby’s International Realty. All Rights Reserved. The Sotheby’s International Realty trademark is licensed and used with permission. Each Sotheby’s International Realty office is independently owned and operated, except those operated by Sotheby’s International Realty, Inc. The Sotheby’s International Realty network fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. This material is based upon information which we consider reliable but because it has been supplied by third parties, we cannot represent that it is accurate or complete and it should not be relied upon as such. All offerings are subject to errors, omissions, changes including price or withdrawal without notice. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully.
Do Not Sell My Personal Information | Privacy Policy | Terms of Use | Accessibility Statement