The real estate sector struggled the week to send a message of optimism. In two different videoconferences the idea was shared that Covid's pre-pandemic demand remains waiting for the economic uncertainty to dissipate. Several experts assured that as soon as the activity is reactivated, there will be a rapid recovery because investors are with money in hand.
The president of the Spanish Mortgage Association, Santos González, maintained that there is "a dammed demand." During a colloquium organized last Thursday by the SIMA real estate fair, he wanted to make it clear that this demand exists because "the hardest part of unemployment is not in the buying market". It is simply postponing its decision until a "reasonably controlled economic environment" exists.
"The dammed demand has to emerge," said the vice president of International Financial Analysts (AFI), Angel Berges, supporting his conference partner. This expert reinforced his claim with data that has been observed in China, where the sale fell 95% in the months of confinement and, two months later, he has already recovered two thirds of what he lost.
Gloval's president and chief executive officer, Roberto Rey, also hopes for a rapid recovery in the sector, as long as a new outbreak of the disease is not generated. He went back to the 2008 crisis to make people understand that the current situation is much more favorable, because the promoters are not so indebted and banking is much more solvent to grant credit.
This optimistic thought was also observed in the colloquium 'The day after, a new real estate sector?', Held last Tuesday online. During the meeting, the president and CEO of Savills Aguirre Newman in Barcelona, Anna Gener, insisted that "we are in a situation of parentheses, in which the operations have been frozen pending the recovery of the good (economic) tone ".
NO TIME FOR OPPORTUNIST INVESTORS
For his part, the CEO of Cushman & Wakefield in Spain, Oriol Barrachina, stressed that "recovery is just around the corner." For this reason, he advised against investors that take an opportunistic position, because that desired price discount may never come: "No significant adjustment has yet been observed."
The CEO of Engel & Völkers in Spain, Juan-Galo Macià, reinforced this idea: "Promoters are reluctant to adjust prices". In his case, he recognized that there are cases in which the price has decreased by 40% ", although they are the exception. He pointed out that these operations occur, especially in the retail sector, where the businessman of a small SME sees that your business is not working and you need liquidity.
WHAT WILL HAPPEN UNTIL RECOVERY COMES?
Until that desired recovery arrives, which is expected in 2021, the sector is going to have a very tough 2020. For example, Idealista estimates that sales operations will decrease 30% year-on-year in the year as a whole. Slightly less pessimistic are in Pisos.com, where they predict that they will only fall between 15% and 20% compared to the previous year.
This fearsome situation will leave many real estate agencies in the lurch, which will have to close their doors. The real estate consultant and founder of Red Expertos Inmobiliarios, Eduardo Molet, calculated that up to 25% of these companies will have to lower the blind, for the most part SMEs that have not been invoiced for a couple of months and do not have sufficient liquidity to continue.
Regarding prices, that dammed demand is going to cause a fall that from UBS is estimated at around 6% by 2020, although the expectation is that next year the levels prior to the crisis will recover. In Gloval Analytics, the forecast is 6.5%, the worst case scenario he has drawn.
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