Life after COVID-19 in the real estate sector

Predictions show that the sector will be “alive” and will continue to be “attractive” for investors

Virtual meetings between professionals in the real estate sector have been the order of the day during the coronavirus confinement period. In these meetings via Zoom or Skype, amongst other platforms, there of course has been a lot of talk about what will happen to the real estate business the day it returns to normal. A recent meeting of this sort has taken place at the hands of the Círculo Ecuestre of Barcelona and from it conclusions have been drawn that give way to hope in the sector: Spanish real estate is still very much alive and continues to be attractive for investors.

After months of recovery, everything points to the fact that the coronavirus crisis will have a significant impact on the real estate sector. But what will happen after the pandemic? Anna Gener, CEO of Savills Aguirre Newman in Barcelona, Juan-Galo Macià, CEO of Engel&Völkers in Spain and Oriol Barrachina, general manager of Cushman&Wakefield in Spain, have analysed the possible impact of the coronavirus on one of the main sectors of activity in the Spanish economy.

“The social change we have experienced as a result of the pandemic will have an impact on how we view real estate, on the type of contracts that will be carried out and on the closing of operations. We are living a situation of parenthesis, but those who wanted to invest in Spain, will continue to want to do so when everything is over,” explains Gener. According to the directive, uncertainty and discounts will take over the negotiations in the coming months.

“We are in a completely different situation from that of the previous crisis. Today, owners in Barcelona, the Costa del Sol and Madrid are in a situation of no debt or bearable debt, great professionalisation and a much more robust sector,” says Gener, who adds that “the recovery will happen with some speed.

“We also have to take into account, especially in the office business, that one thing that plays in favour of stabilising the market is the balance between supply and demand. In the main areas of Spain we find that there is no oversupply (like in the previous crisis) but rather the opposite, that there is tension and more demand than supply. And the same goes for logistics. This situation is favourable“, says the directive.

For his part, Oriol Barrachina, from Cushman&Wakefield, assures us that “with the perspective we have been given these weeks, we are still at the moment of analysis. We are asking a lot of our clients and our investors about the state of their operations and their decision making. Now it is time to analyse and learn how things are changing to adapt”.

The Cushman&Wakefield manager, however, stresses that “many of the problems we are now facing were already happening. The penetration rates of ecommerce were low compared to other countries. This will increase the participation of ecommerce. So will telecommuting. We were already incorporating elements of teleworking…”, says Barrachina.

The manager adds that “after COVID-19 in a world that is more omnicanal in terms of commerce and more flexible in terms of offices, but not everything will be ecommerce or telework“.

Joan Galo Macià, from Engel&Völkers, agrees that the real estate company “is facing a totally different stage from the previous one“, and explains that “in the residential area there will also be a before and after. It is incredible how much a sector can change in just 50 days”.

“For someone who is going to buy a house, but not just in the current climate, always, they must have optimistic medium-term plans, both in their work environment and in the economy, and this is something that we find difficult to see now. There is an enormous demand backlog, and we are loocking into how to redirect it. We are not lying if we classify these two months as the most convulsive in real estate in recent years,” he adds.

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