As South Africa settles into its lockdown period, its people (at least those who are required to stay at home) are facing large questions: how long will this last? and will my job be safe? and should I have bought more than 21? Like all things, the answer will become clear in due course. All it takes it patience.
In the meantime, everyone and his uncle will be making predictions about the world after corona. We are now all armchair generals. Unfortunately, most of the predictions will be wild guesses and fluff time fillers. Ignoring predictions, then, what do we actually know?
Travel restrictions will continue for longer than most of us realise. The Spanish Flu of 1918-1920 took two full winter cycles before it died out, partly because it circled back to previously infected areas. Today’s governments are well aware of the risk of re-contamination. This is why China and Singapore still remain largely closed despite having successfully controlled the spread of COVID-19 within their borders. International travel (particularly air) will be hit for at least 12-18 months and may never recover to where it was before.
Fear of future contagions could result in permanent and lasting changes to the way people move freely around the world. Will Instagram holidays to Phuket and bachelor parties in Riga be a thing of the past? They might well be curtailed, particularly if passengers are required to be tested for pathogens prior to boarding international flights.
Quarantine will become more normal. Originally a period of 40 days from the original French term (quarante means forty), we should expect self-isolation to become more regular. It doesn’t have to be government-imposed lockdowns, however. With many people now more able than ever to work from home, self-isolation may become more common if people embrace the idea that self-quarantine is the socially responsible thing to do when ill.
Hospitality and tourism will be transformed. With restaurants and hotels essentially shuttered for an indefinite period, there will be bankruptcies and heartache for many concerned. At this point it doesn’t seem that landlords are minded to give rental holidays and these businesses have ceased to generate any revenue. Worse, as most inbound foreign travel is booked well in advance, it will be at least 6-12 months before these businesses see business start to return from overseas. At this point, it is hard to see what will happen when the dust settles. Will it lead to consolidation? An extinction level event for small hoteliers? Government certainly thinks it will have a devastating impact or they would not be singling out the hospitality sector for special support measures.
Commercial landlords will be sweating. We are talking medium-term anxiety here, not sweating the assets. As companies become more comfortable with employees working remotely, from home and in disparate locations, they may question why they need to have large centralised offices with floor space and desks for everyone. This trend was already in place (hot desking, anyone?) but larger companies might embrace the idea that they only need meeting rooms and limited shared working space. Commercial developers will be very aware of this trend.
Further decline of the shopping mall. Because we are so familiar with shopping centres, we don’t really appreciate that they have only been around for 70 years or so. Prior to the 1950s, all shopping was done in individual shops or by delivery. By the 1980s, their dominance seemed assured. That was, of course, until their economic model was threatened first by large, out-of-town big box warehouses and more recently from online retailers. If B2C delivery systems improve in efficiency and cost and consumers become more comfortable with the range and choice of delivery, the mall might see more headwinds in coming years.
Medical testing may become more routine. We can assume that manufacturers of medical testing kits will be doing well. Perhaps airports will in future be equipped with swabbing and breathalyser equipment in the same way that they today have x-ray and drug testing machines. One more hurdle in the funfair that is air travel.
There will likely be a population swell towards the end of 2020 and into early 2021. Why? People are spending time at home. For many, pregnancies will be either the intentional (now might as well be the time to start that family) or unintentional (oops!) result of self-isolation. The introspection brought on by isolation may prompt life changes in some, including starting families.
As with everything, there will be unintended consequences. Some sectors will suffer and others will flourish in due course but telling them apart now is difficult indeed. What is clear is that there is nowhere for investors to go. With all financial assets falling in value, it is hard to know whether to change lanes. In a new environment of negative interest rates abroad, however, it is imperative to remain invested. Putting one’s offshore investments into cash right now is the surest way to crystallise losses and ensure negative growth going forward.