How will the Coronavirus Affect the Real Estate Market in Spain?
The real estate market has been affected by the Coronavirus and the measures taken by the Government to stop its spread. Before continuing to analyze the real estate sector, we remind you to follow all health recommendations, such as staying home except in extreme need.
During this time of full quarantine to prevent the spread of Covid-19, Andrea and Pablo called us. They are a family looking for a home during this health crisis. They needed to move as soon as possible.
The majority of the people have postponed their decisions to buy or rent a home, but there is another part of the population with an urgent need to move, as in the case of Andrea and Pablo..
Apart from everything we talked about finding their possible future home, I remember that I ended the conversation by saying:
“Keep calm, breathe & stay the course. The storm will pass.”
Apart from the residential sector, the health crisis caused by Covid-19 is having great effects on other types of real estate such as premises, shopping centres, offices, logistics, and co-living.
In view of so much uncertainty, at Geräh Real Estate Partners, we have prepared this article to help you understand the current landscape of the real estate sector with the coronavirus still spreading and what could happen in the coming months.
The Comercial Sector
If you own commercial real estate or if you are a tenant, surely you already know that without a doubt, this is the sector most affected by the crisis generated by the coronavirus.
A friend of ours who works in a law firm is dealing with a large number of cases of commercial tenants requesting a reduced rent payment from their landlords. It is still early to know what will happen, but the President of the Madrid Business Forum has demanded that the Spanish Government suspend the payment of commercial rents, as has been done in France.
Apart from the difficulty of paying the rent that tenants of commercial premises face and the damage that this would have for the owners, other large projects have been delayed by the Coronavirus, such is the case of the new Primark in Barcelona o The Open Sky in Torrejón de Ardoz, a commercial park of no less than 90,000 square meters.
In short, with traditional commercial stores already feeling the effects of online shopping, the health crisis caused by the coronavirus may be a further devastating blow.
The Business Sector
With companies having the possibility of telecommuting with their employees, the Office sector has been hit less than other real estate sectors. In fact, in the midst of the Coronavirus health crisis, several important transactions have taken place in the Office sector, such as the rental of a 600-square-meter offices by the French luxury giant Louis Vuitton in The Window building.
The Housing Sector
Among other things, the residential market is experiencing complications due to the difficulty of making visits. It is worth remembering that housing is a basic necessity and there are people who cannot postpone accessing one.
The mortgage moratorium decreed by the Government on March 17, 2020 also stands out among the news.
We recommend you read the Official BOE that we leave you here.
In order to request it, you must meet certain requirements and provide specific documentation that you can see summarized in this link from Banco Santander, If you have any questions about it, write to us and we will gladly help you. An important note, we recommend that you make the request as soon as possible since it has an application period of up to 15 days after the end of the validity of the emergency decree.
On the other hand, the signing before Notaries of sales and mortgages are paralyzed, except in cases of urgency. You can get more information this article prepared by the Idealista team and again we offer help if you have any questions about this topic.
With regard to rent, the public housing stock in Madridd and Catalunia have approved their respective rent moratoriums. Our opinion in this regard is that most of the owners in Spain are private natural persons, so we consider that it would not make any sense to apply a general moratorium on rent.
What can happen in the coming months in the real estate sector in Spain?
We hope that the Coronavirus crisis and its Covid-19 disease will be effectively contained thanks to all the efforts of health personnel and the grain of sand that each of us contributes by staying at home.
Part of the effects on the world economy of this health crisis can be seen in this BBC Article: several economic indicators have plummeted in recent weeks.
In Spain, the IBEX 35, the main indicator of the 35 largest and most valuable companies in the country, has fallen by nearly 40% in a single month. At the beginning of February it was impossible to predict that this would happen.
The recovery process will take time and will depend on when the crisis ends. Regarding the real estate sector, there are generally two positions on what could happen:
The optimists, like Anna Gener of the renowned company Savills Aguirre Newman, who think that the second quarter of 2020 will be one of contraction but that there will be a third quarter of rapid recovery. You can read his full analysis by clicking on this link.
Other experts in the real estate sector, like Fernando Encinar from idealista or Rafael Gil from Tinsa, are not so optimistic and think that the impact on the residential sector will be drastic due to the coronavirus.
Our final opinion
The coronavirus has impacted politics, education, and the global economy in ways never before imagined.
We can understand that the global economy has entered a hibernation phase at the moment and it is still early to know how long it will take to wake up and how profound the changes will be.
For the real estate sector, there is one thing that we must be clear about: what is happening now is not similar to what happened in the 2008 crisis.
The 2008 crisis originated in the financial system.
The 2020 crisis was generated by a pandemic never seen before.
We do not know if the recovery of the real estate market will be U-shaped. For us, what is certain is that the recovery will depend on how long it takes us to stop the expansion of the Coronavirus and how we manage to get out of this pandemic as a society.
Please stay home, stay safe, healthy, positive and productive, this storm will pass.