Session summary: Prospects for the real estate sector after the state of alarm

"The reactivation of the construction and real estate sector is key for the maintenance of many jobs and has a significant weight in our GDP."

On July 6, a session was held in FIDE about "Perspectives of the Real Estate Sector after the state of alarm ". Three prominent players from the sector have participated as speakers:

  • Juan Antonio Gomez Pintado, President of the Association of Real Estate Developers of Madrid, president of the Association of Promoters and Builders of Spain and president of Vía Ágora.
  • Nicolas Diaz Saldaña, CEO Tempore Properties, SOCIMI
  • Joan Garcia, Managing Director - Corporate Finance Colliers Spain.

He moderated the session Jose Ramon Couso, Partner and General Director of CECA MAGÁN Abogados and member of the Academic Council of FIDE.

The situation derived from the pandemic has undoubtedly affected numerous economic and productive sectors in our country. The reactivation of the construction and real estate sector is key to the maintenance of many jobs and has a significant weight in our GDP. Although the incidence of the pandemic in the "stop" of economic and professional activity is asymmetric by regions, sectors, products, etc. A reflection is required on the current situation in real estate developments, in investment processes and transactions, as well as for the holders of rental properties.

The speakers have extensive professional experience in the real estate sector and hold positions and functions of responsibility, so their opinions on the current situation, possible alternatives, opportunities and even legislative measures that contribute to a new positioning of the sector and that contribute to to the global recovery of Spain.

Here are some of the conclusions and messages from the session:

Intervened Nicolas Diaz-Saldana to comment on the situation in the Residential rental sector

The fundamentals of the Spanish real estate sector continue to be good from a macro and micro point of view. The companies are in good financial health, there is no excess supply in the market, there is liquidity for investors, interest rates are low and the level of indebtedness is lower than in the past crisis.

The separation of the property activity of the promoter provides stability to the sector in the long term due to the actions of the institutions.

Residential rental has come to stay. Demand will continue to increase in the coming months due to socio-economic changes in consumption patterns, greater diversity in family structures and greater geographical mobility of workers.

Investment funds continue to bet on the residential rental sector, although they are waiting to know the impact that the COVID 19 crisis will have on rents, asset prices and their values ​​before tackling new and ambitious investment projects .

The increased demand for residential rental in the coming months may increase the imbalance between supply and demand in this market. For this reason, it is convenient to work with national and local public administrations to boost the supply of housing for rent by qualifying new land, improving and streamlining the licensing processes, reducing the term to grant licenses for change. of use, and the public-private partnership to undertake projects to promote social and affordable housing with long-term concessions that are attractive to private investors.

Joan Garcia analyzed the first impressions after the state of alarm.

There are good fundamentals for the real estate market to continue in good health: low interest rates and large volumes of liquidity.

It is true that the current uncertainty is high and that always retracts the investor. However, there is interest on assets with long-term contracts, industrial and logistics assets, rental housing (BTR) and other alternatives (coliving, student residence…). That interest is bearing fruit in transactions despite the virus.

Structural changes in demand are coming that we are not able to quantify: incidence of telework in demand for office spaces, in the type of housing or even in the demand for housing by foreigners; incidence in retail trade and shopping centers; to which we must add those derived from the crisis itself.

The impact of the crisis on financial institutions will be key. We are seeing a tightening in financing conditions that are of concern. It is important to emphasize that we need a strong bank with the ability to finance so that the sector acts as one of the drivers of the economy.

A long-term inflationary scenario (in the short term is not foreseeable) could favor investment in assets as protection for it.

For its part, Juan Antonio Gomez-Pintado contributed the perspective of the developer and construction company

Before the COVID-19 crisis, we were in a process of transformation of the sector in terms of energy efficiency and that now is expected to accelerate. The rehabilitation of the existing housing stock will be very important.

Public-private collaboration is one of the levers for activating the sector and a way to generate a rental housing stock that will be public in the future.

The sector is mainly oriented towards the market for buying and selling housing and it will continue to do so for the most part. The rental of housing has to gain space within the activity of the sector.

There are two definitive actors for the sector to be able to reactivate the economy, the future reaction of the Banking and the measures that the Government can take as well as the speed of the response

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