COVID-19 is having a strong impact on all human activity globally. And, in this scenario, it is inevitable to ask what repercussions this situation may have on the economy, on the real estate market, on companies and on the valuation of assets.
The current situation is unpredictable and unusual, and enormously volatile, and the dimensions of its impact will depend on how long this situation lasts.
During the 2008 crisis the real estate sector was the most affected. The bursting of the real estate bubble marked the beginning of that great crisis. The data showed this to be the case. The Spanish National Institute of Statistics announced a sharp drop in home sales (27% in the first quarter of 2008) and in mortgage contracts (25% in January 2008). Twelve years later another big crisis has started, but in this case the root has been health. How will the real estate sector come out of this new crisis?
In recent years we have seen strong growth in professional investment in the Spanish real estate sector, although its pace was beginning to slow down due to strong competition and the gradual rise in prices. The driving force behind the expansion was threefold: the high level of liquidity, the lack of attractive investment alternatives and our growth differential with respect to the rest of Europe.
The covid-19 has left the signing of many real estate operations in the air, has paralyzed the market for offices and retail and has relaxed the day to day of investment funds that were considering new purchases in the country
The impact of the coronavirus will depend on the length of the quarantine and the movement limitation of international buyers. However, the impact on the middle and upper segment of the real estate market is expected to be short to medium term. Due to the fall in financial markets and the unprecedented drop in interest rates, the real estate sector is expected to remain one of the most interesting assets for investors
Although the real estate activity has decreased by about 60%, it is not completely paralyzed, there are still many tools with which to work to continue offering solutions to customers.
Take advantage of the confinement to train and update portfolios, to strengthen relationships with customers, to recycle and to bet much more on technological innovation.
When the confinement is over, there will be less meetings outside the offices, less travel and the activity will be more focused on conference calls and video calls; this will allow more time for the real estate professional for the so demanded and necessary family conciliation.