Beyond Covid-19: parsing the tea leaves - Part 1
Trying to understand the long impacts of the COVID-19 pandemic one area at a time – social, economic and cultural
A Regular Year
The year 2020 started off like any other year. With a lot of promise and a sense of relief that the previous year has come to an end. And then, somewhere in mid-March, we were bang in the middle of a global pandemic. The very extent, speed and spread of the contagion took the collective global consciousness by surprise.
As we navigate through this unprecedented global crisis, unheard of in the modern era, we must take stock of where this is going take us – as individuals, as well as our collective species.
At this point in time, almost every individual person will tend to agree that the world we have inhabited till January 2020, is going to change, probably irreversibly.
The nature of the pandemic, its virulence and spread through asymptomatic patients, means that we are in this for the long haul. Expect areas to go in and out of lock downs as new outbreaks emerge in areas previously cleared of the contagion. It will be important to remember this characteristic as we try to parse the tea leaves to understand our future.
Changes in our lives
As an individual our lives consist of a number of regular activities: we go to school, we go to our work places, we take our children to the park, we go to malls, restaurants and movies, we go for concerts, we go to the gym, we go to banks, offices etc.
With the exception of a few of the above activities, such as going to our work places, most of the other activities will get classified as something which was previously unthinkable – optional.
So, we will see that education happening online, with physical presence in schools and universities becoming optional. No school or university will agree to risk becoming the epicenter of a new outbreak. For short term, expect education to become more egalitarian before universities again figure out how they will differentiate themselves.
We will not see gyms and movie theaters and concerts opening for atleast a year. So, these places will find it difficult to sustain without a regular incoming traffic of new and renewed subscriptions. They will be forced to vacate the commercial properties that they occupy. Same will happen as people start avoiding banks and utility offices and engage more through digital transactions and methods. So expect banks to reduce number of branches required to service the same set of customers. Expect number of screens showing movies to reduce as it becomes impractical to sustain existing number of screens with low footfalls. More and more big ticket movies will go directly to OTT streaming apps.
The Domino Effect on the Economy
A crashing commercial real estate market will have a catastrophic effect on the economy. A healthy commercial real estate environment provides a constant cash flow to businesses which is then utilized in other sections of the economy. When this cash flow gets disrupted, huge numbers of collateral projects and jobs get impacted. In effect, we might end up seeing a decentralization of city living. As, remote working and remote living becomes feasible, and in some cases, preferred means of living, living close centers of work and education becomes less important. Over the course of next five years we will see the very fabric of the society we live in change completely.
And this change will drive a change in the priorities of investment by other parties, such as municipalities and governments. Remote transits will gather importance and inner city transits will reduce in priority.
It is going to be extremely difficult to anticipate the exact nature of these changes. We are going to be living in extremely interesting times.