Currently, in the real estate sector in Spain, coronavirus continues to be ubiquitous. But the plan to relax the lockdown rules by sector, activity and autonomous region marked the return to what has been coined the new normal, with construction work underway again.
The impact of the pandemic on the Spanish economy and, specifically, on the real estate sector, manifested itself in a cascade of bad indicators that were published throughout May, although several IPOs and the sale of offices in Madrid and Bilbao were also announced.
The current climate has been marked by the partial return of workers to offices. This has accelerated the implementation of plans to protect against the virus in office buildings, as well as to the reorganization of tasks and the adoption of remote working as a tool that is here to stay. The Spanish Association of Offices (AEO) estimates that we will not see a significant return of workers to offices until September, and any returns will not exceed 50% of the capacity. Moreover, the financial results of the listed companies specializing in offices, such as Colonial and Merlin, do not yet reflect the post-coronavirus effect.
In the market itself, Torre Rioja, owner of the headquarters of various multinationals such as Axa, BNP and Ikea, became a Socimi during the month and now has the obligation to go public within a maximum period of two years.
In addition, Metrovacesa saw how the lockdown delayed its plans for the old Clesa factory, whilst the City of San Roque, in Cádiz, approved its purchase from the Andalucían Government of the former Diego Salinas barracks building. On the other hand, the engineering company Idom sold its headquarters in Bilbao and Madrid to Catalana Occidente and Grosvenor for €90 million.
And in terms of contracts, a company in the Fintech sector signed the rental of 1,500 square meters of offices in the heart of the financial centre of the Andalucían city in the middle of lockdown.
The coronavirus is driving logistical and last-mile activity to unknown levels. Delin Property closed its second rental contract for the occupation of around 11,000 square meters in the first of two warehouses, with the outsourcing services company Arvato Supply Chain Solutions.
Meanwhile, Meyer Bergman launched a logistics platform that will accumulate €2,000 million in European last mile assets. Realterm Logistics, an investment group from the US specializing in logistics properties in the United States, Canada and India, also arrived in Spain with the acquisition of its first warehouse.
Cilsa grew with the concession of two new plots in the ZAL of the port of Barcelona, and the British real estate company Segro announced the completion of 4 operations and its plans to invest €1,000 million in Spain.
The tourist activity indicators published by the National Institute of Statistics (INE) for April all amounted to zero, an unprecedented statistic, which highlights the impact of the lockdown on the tourism sector, the most affected by this crisis. In fact, several companies reported that they are considering not opening for the remainder of the tourist season.
OHL halted the sale of its 49% stake in the London ‘Old War Office’ complex, a project similar to the Canalejas operation in Madrid. Meanwhile, Globalia engaged EY to handle the sale of its hotel portfolio, and the hotel chain Arcea Hoteles bought the ‘Palacio de las Nieves de la Felguera’ from the real estate company Aliseda after more than a year of negotiations.
And there was even room for new initiatives. The Larios family’s real estate company, Salsa, announced that it is planning to transform 250 hectares of agricultural land into a luxury hotel, residential complex and golf course.
The cessation of non-essential economic activity for two weeks during April halted the construction of 4,809 developments in Spain and a total of 131,471 homes, according to data from the Brainsre real estate big data platform. Of those, almost 57,000 units had an estimated delivery date this year. The return to full-time building work in May will at least boost deliveries, spurred on by the launch in Madrid of the controversial express licenses, which replace the traditional lengthy procedures with sworn statements of responsibility.
But uncertainty continues to rule, with the ghosts of late payments and credit tightening just around the corner; applications for permits to build new homes fell to 5,956 in March – when the health crisis started – down by 36.6%. Mortgage signings suffered, as did house sales, with several firms announcing price cuts including Quabit.
In this context, two new developments captured everyone’s attention. On the one hand, the definitive approval by the City Council of ‘Madrid Nuevo Norte’, formerly known as Operation Chamartín, after 26 years of paralysis,
On the other hand, the Reuben brothers, the former owners of Santander’s Ciudad Financiera acquired 250 hectares of land in the Madrilenian municipality of San Martín de Valdeiglesias where they plan to build hundreds of houses and a hotel.
The Government has approved a controversial exit plan from the lockdown, which has put the autonomous regions on the warpath due to unfair treatment. Madrid, in particular, felt aggrieved after it entered Phase 1 late. Even so, the announcement that the country will be open to international tourism from 1 July, has comforted companies in the tourism sector, along with their share prices.
The resumption of building work has also raised some hope in the residential real estate sector. And the debate about the implementation of formulas to facilitate the sale of homes to young people has returned: the AEB is going to discuss with the other banks a proposal from Santander, which involves granting mortgages of 95% backed by State guarantee to young people.
But undoubtedly, the battle to obtain €140 billion for Spain of the EU’s stimulus plan, which amounts to €750 billion in total, figures that are unprecedented in volume and scope, is now where the central Government’s efforts are focused. The forecasts for the fall in GDP in Spain and the Eurozone are terrifying. According to the President of the European Central Bank (ECB), Christine Lagarde, the eurozone economy will suffer a contraction of between 8% and 12% in 2020.
Top 10 most read news – May 2020
- How Many Square Metres are Spaniards Spending the Lockdown in?
- Cerberus Prepares an ERE for its Spanish Property Developer in light of a Forecast Decrease in Sales
- What Impact has Coronavirus had on the Real Estate Market in China?
- Árima Temporarily Cancels its Incentive Plan due to Covid-19
- What Will Happen in the Real Estate Sector in 2020 according to the Experts?
- Madrid’s Gran Vía Retains its Appeal During the State of Emergency
- The Portuguese Real Estate Market in April
- Aberdeen purchases a sporting complex near London to build 170 rental apartments.
- La Generalitat Suspends the Sale of Homes from Banks and Funds
- The Previous Recession Lasted 6 Years and House Prices Fell by 30%: What will Happen in this Crisis?