The Real Estate sector in Spain post-pandemic
The health crisis caused by COVID-19 has brought consequences in all sectors of the economy. The Spanish real estate market has always been an indicator of the country’s general economical. The pandemic has had an impact on the real estate sector, but far less than the previous crises.
Recessions are expected in the years to come. However, the impact will be infinitely less than in 2008 since the context is not the same; there will be a change in the mentality that will modify the buying habits; other avenues of financing for the real estate sector will be promoted; regularization measures will gain strength, and a new group of investors will gain confidence that will see their opportunity in the current context but with a view to the future.
COVID-19 consequences in the real estate market
In the area of the “new normal” everything has undergone changes, including the Spanish real estate market. With the return to regular activity, certain consequences have been observed that the passage of COVID-19 has left.
At first there will be a crisis derived from the global pandemic that will harm Spanish real estate, but today both the real estate and financial markets are more healthy. Family indebtedness is better since there is savings and interest rates are among the lowest in history. Bringing the 2008 real estate crisis to the present is also a mistake, because now the real estate sector is not directly related to the crisis.
Then, the “new buyers” have changed their spending habits. Now they know exactly what they want and do not want when they look for a new home. Natural light, outdoor spaces, more square meters inside the residence are frequently requested. Also, the proximity to the city centre is not as important as it used to be. Therefore, the suburbs of the big cities are gaining prominence.
On the other hand, in terms of financing the Spanish real estate market, other channels such as joint ventures will gain strength. This financial vehicle is temporary between the partners that form it for a common objective, a specific commercial operation. At Darya we are committed to this system since we created the Dazeo joint venture with our partner Eurazeo.
As for the new proposals for regulatory measures, various autonomous communities, including Madrid, promote, after the pandemic, streamline procedures in the approval of licenses, guaranteeing legal certainty. These include eliminating most urban planning licenses, replacing them with a responsible declaration. The proposals are based on the confidence to free up soil.
New and young investors will launch into the Spanish real estate market as they will see their opportunity in the current context. Young people will buy more easily after a crisis compared to older investors. They have no loss references and are well informed and advised.
Evolution of the Spanish real estate market
Given the current scenario, the different real estate players in the national market have various initiative to solve the possible challenges that may arise. Increasing unemployment and uncertainty will increase buyer decision-making time. Also, credit restrictions could slow home purchases.
However, this “break” will be solved since once the initial moment has passed, the pace of the real estate sector will gradually return to its usual speed (expected for the second half of the year).
In addition, the residential sector area continues to inspire investor confidence in being a good savings alternative. For its travel, security and the mentality of the national investor.
Finally, it is estimated that the luxury housing sector will maintain its good prospects with little change. It will remain stable in the general contraction situation.