The Russia-Ukraine conflict may seem to prolong as ceasefire talks between Russian and Ukrainian officials on the Belarusian border proved to be unfruitful.
Despite earlier claims of Russian president Vladimir Putin that he will not invade his European neighbor, explosions were heard in Ukraine’s capital, Kyiv, and several other cities last February 24. Days later, Russia then launched another attack in the country’s second largest city, Kharkiv. This is Russia’s biggest military aggression since World War II.
Evidently, many lives were already lost amidst the conflict of opposing forces, and we still don’t know how many lives this war will claim in the future. A lot of Ukrainian civilians were displaced from their homes and were forced to flee and take shelter far away from the Russian border.
But, aside from the innocent lives trapped in this hostility, there’s another victim of this conflict who remained silent all this time—properties.
Russia’s invasion took a huge toll on Ukraine’s critical infrastructure. All of the bombing and explosions inflicted massive damage on the country’s residential buildings and bridges—there were even reports of Russian troops attempting to attack Kyiv’s largest water reservoir. Ukraine’s military infrastructure weren’t also safe from the Russian forces’ attacks.
Moreover, most of the construction contractors pulled off their infrastructure projects, as local workers flee for their lives’ safety.
While we are hoping that the heat between these two countries won’t escalate into more casualties, let’s take a look at the effect of war in real estate investment in the previous history.
Not a lot of research has been conducted when it comes to the effects of war in real estate industry. One reason is how the way people defined ‘war.’ The definition of war gradually shifted and broadened through times as the means of attack also changed from wide-scale and full-blown to isolated but deadly ones. However, we cannot safely say that there is no correlation between the two.
Let’s take the Second World War for instance. Also known as WWII, this conflict erupted when Germany invaded Poland which lasted from 1939 to 1945. The rivalry between the Axis and Allied forces killed an estimated of 70-85 million people and destroyed 70% of Europe’s infrastructure.
Despite the devastating effects, the demand for real estate, particularly residential real estate, surged up as returning soldiers were eager to make homes and start families after the war. Real estate value rose along with the demand for real estate.
On the other hand, let’s take a look at the September 11 attack. Also known as 9-11, the assault brought ripples into the Manhattan economic waters, particularly in the sale of vacant office lots. Posed as potential targets for future attacks, investors put a halt on investing in commercial establishments like this. In some cases, the cost of insurance premiums rose following the said attack, lowering the investment confidence from the tenants’ and investors’ perspective.
Though it is hard to put into actual numbers the effects of war in commercial real estate, the aftermaths can still be seen through these ways:
- Potential real estate investors might consider putting their investment on hold until the economy recovers
- Large corporations and firms may put expansion projects on hold, which in return weakens the demand for commercial real estate
- Travel and tourism rates will lower in areas affected by the conflict.
- Also, people are more inclined to stay home when there’s no significant amount of money to spend for tourism and travel.
Other Form of ‘War’
Aside from the physical threats, the real estate industry is much more concerned about another impending risk: cyber attack.
Other industries like finance, healthcare and manufacturing had their fair share of experiencing and combatting cyber attacks. And just like these high-risks industries, real estate industry is not immune to this threat at all. In fact, real estate investors and developers are starting to get wary of potential cyber attacks, especially in this technological age.
Real estate companies and agents utilize the power of technology, especially the social media to compete in the real estate market. While this is an efficient way to introduce and offer housing products and project listings, real estate companies are also exposed to different risks due to low-level or lack of preparedness against digital attacks. Outdated software and computer systems, limited password facilities and out-of-date network security are among those that may compromise many organizations.
Moreover, some real estate companies are outdated with the latest cyber security, which poses no stand against more sophisticated cyber attacks.
With valuable data—personal and sensitive information like social security number, contracts, login information, bank accounts and transactions, among others these investment firms hold, it is plain to see why cyber criminals are taking advantage of these vulnerabilities to steal sensitive data.
In order to protect clients from any suspicious activity, real estate companies should be well-informed of the threat and risks so that they can take precautionary steps to avoid falling victims to these kinds of cyber attacks.
Taking Notes: What is Social Engineering Attack?
Here are the basics: Cybercriminals investigate first about their potential victim’s data—background information, entry points and weak security measure—before launching a social engineering attack. It relies on human error and psychological manipulations—like gaining the victim’s trust or in reverse, stirring panic—to force the victim to reveal his personal and sensitive information.
Social engineering attacks poses as a big threat to real estate industry. Aside from strengthening network security and policy measures, real estate firms and investors should educate themselves about the types of attacks hackers will launch to easier combat them.
Ransomware is a type of malicious software with the sole purpose to extort money from its victims. Hackers will send out malicious messages or malicious code to potential victims purely with the intention of making them click on the included link. As the victim enters into the trap, the attacker gains access to the victim’s sensitive data and resources, encrypting them in the process. The hacker effectively blocks the victim’s access to files or computer system until a ransom is paid. Real estate industries need to be careful as these kinds of digital attacks are evolving and could shut down business or cause devastating company reputation damages.
Business email Compromise
Business email Compromise (BEC) happens when a cybercriminal penetrates into a business email account and commits identity theft. He will then send emails to other employees or companies and persuades them into transferring money or funds to accounts owned by the attacker. This is the most common form of cyber attack used by hackers.
Risks on Cloud Vendors
The real estate industry adapts into using cloud-based services to store their data on the cloud. While this may be an efficient way to organize resources, it poses a potential bullet point for cyber attacks.
Hackers basically don’t need to access into your business, instead they’ll just need to penetrate into cloud vendors to steal data.
The Damaging Effects
The consequences of cyber attacks shouldn’t be taken lightly. It could cost a lot of money to repair the damaging effects of cyber attacks. Here are a few:
- Loss of sensitive data
- System or server shutdown
- Ransom money paid to hackers
- Threats of lawsuit from affected clients
- Regulatory fees and/or penalties
- Damage in the company’s reputation
Creating a Culture of Awareness
Real estate companies doesn’t necessarily need to bring out lumps of money in order to protect their business. Creating a culture of awareness and presence of mind among the employees, especially from malicious emails and suspicious activities online pays a great help to counter future cyber attacks.
Here are some tips and reminders to help you curb the threats of cyber attacks.
- Avoid clicking on malicious emails you receive. Might as well delete them from your inbox to prevent other people from accessing it.
- Use combinations of letters, numbers and symbols in creating strong passwords
- Change your passwords regularly
- Avoid doing business transactions using public, unsecured wifi
- Avoid using the same password for multiple accounts
- Ensure that your anti-virus and firewalls are up to date, as well as your operating system and programs
- Regularly back-up important data, application and systems. Keep them separated from your usual online system
- Check applications for malicious software or malware before downloading or installing them
Protecting Your Firm
The cybersecurity measures we have now in the real estate industry can be considered as ‘premature’ compared to other industries. Here in the Philippines, a total of 2, 778 cybercrime offenses were recorded by the Philippine National Police (PNP). Although we aren’t certain which of these specifically targeted real estate industries, it is evident that cybercrime is another challenging task our nation and authorities face.
With that, the PNP Anti Cybercrime Group was formed last March 20, 2013 as a response to the growing number of cybercrime-related incidents. Though, the PNP admits that the country ‘has yet to enact and implement its own comprehensive anti-cybercrime law.’
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Vistaland International Marketing, Inc. (VIMI) is the international marketing division of Vista Land. Aiming to provide OFWs and migrant Filipinos a home in the Philippines, VIMI has established long-lasting relationships with brokers and clients around the world.