Impact of COVID-19 on the Real Estate sector

by | 13, Apr, 2020 | News

The real estate sector has been affected by this pandemic, like most sectors right now, which has an impact, yes, it will be a short-term footprint.

There are several points where we have been able to see a direct consequence. Most of the locals have been temporarily closed, as well as the hotels. This added to the moratorium on rental payments that the Executive is considering approving, translates into uncertainty on the part of the owners of said properties.

In the case of buildings whose homes are both holiday rentals and long stays, they encounter the same problem. Will they stop receiving their income?

It is true that the measure of the moratorium and the suspension of rent payments will depend on the vulnerability of the person who has to pay and whether this health crisis has left him or her in a particularly delicate situation, so that at the moment we cannot anticipate events.

On the other hand, there is security in corporate buildings, since at the moment no company has been so affected as to not be able to assume the cost of leasing them. Companies large enough to have a complete office building are opting for other measures such as ERTES or temporary salary freezes. Therefore, both investors and owners are not affected.

And finally, the construction. The break that we are experiencing in our country has forced the construction sector to stop its activities, so there will be a delay in sales of said buildings or homes. In any case, it is only a delay, since today, April 13, these professionals have permission to return to their workplace. In this sense, it is not something worrying.

In general, the professionals at Asset Management Spain feel optimistic about the future of the sector. It is true that there will be a small slowdown in the huge growth that the real estate world was having in Spain before the Covid-19 crisis, but it is not definitive.

Could real estate sales fall? On the one hand, yes, we do not doubt that on many occasions someone who had planned to buy a home and who has lost his job, delays the purchase, or even cancels it.

But we find another front, divestment. Some investors will want to divest to save and put other businesses like their companies first, so there will be new opportunities in the market for those who seek to continue investing. The cycle will then continue to run.

From Asset Management Spain, based on the current circumstances and our own experience over more than 25 years working in the sector, we send a calm message to investors, operators and professionals in the real estate sector. This is not the end.

In addition, before encountering this unpleasant health emergency situation, Spain was experiencing a real estate boom, becoming the most attractive point in the European geography for Latin American fortunes and investors, especially from Mexico and Venezuela.

We have a more solid economic structure than years ago and the collateral damage will not be serious. Covid-19 definitely has an impact on Real Estate, but the slowdown will recover in a matter of months.

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