There is certainly high liquidity in the international market. But it is now important to know where and when that capital will be allocated. The experts gathered this Friday at the “Market Snapshot: Investing in Iberia” session, included in the Real. X Global online event, believe there are good motives for investors to look towards Portugal and Spain as investment destinations. The Iberian real estate market’s good fundamentals are one of the motives that gathered consensus.
Real estate has proven itself the best long-term investment alternative and for Manuel Puerta da Costa, member of APFIPP, Portugal offers a set of attractive conditions, such as the «high returns on its real estate market», along with the «control of the public debt, the strength of its human resources, mobility and infrastructure». «Spain also remains a very interesting [country] in terms of real estate», remarked Paula León, Investor Relations at SAREB, who further highlighted that Spain’s «strong fundamentals are key for investors» to look towards the country. But there are other reasons which place Iberia on the map for international players. Roger Cooke, RICS Spain’s president, added that «the Iberian market reacted very quickly to the crisis and carried out deals with promptness», which plays in its favour from an international point of view.
Uncertainty continues to raise questions...
Despite the market indicators offering good reasons to place Portugal and Spain under the investors’ radar, there is still uncertainty concerning the effects of the pandemic’s second wave which raises many questions for the experts.
Manuel Puerta da Costa has doubts as to when and if this capital will be allocated to these countries. Roger Cooke remarked that right now «it is very difficult to plan for the future», especially when there is «uncertainty on the possibility of future confinements which will have an impact on businesses». For Paula León «the big question is: what is the asset’s price? ». According to her, «we still have no answer to that question». And then, there is what RICS Spain’s president considers «the greatest challenge facing Governments and real estate: recovering the employment», which means not only keeping the jobs that remain but also creating new ones.
Segments react differently
New real estate investments will also depend on how the different segments will react to the crisis. On this point, Roger Cooke remarked that even within the segments there are different reactions to the pandemic’s effects. «Even in hotels and restaurants, there is a very mixed picture depending on location and type of client. Some had a good summer whilst others had a disaster», he explained, exemplifying that, according to him, «fast-food and higher-end restaurants performed better than mid-level, probably due to pricing and not having a regular client following».
Shopping centres too, had different speeds in terms of activity recovery, according to location, highlighted Eduardo Ceballos, AECC’s president, who further explained that Shopping centres located in tourist destinations were more affected during the Summer. To mitigate the crisis’ effects on retail, Eduardo Ceballos restated that there are several strategies which are being implemented, such as «safety measures to assure consumers and quick negotiations between owners and tenants». The use of new leisure activities on shopping centres and the bet on a better integration between online and offline shopping are strategies which are being adopted to prepare the future of the segment, which will, on the other hand, be marked by the «growing interest in essential activities, such as supermarkets», he added.
Amongst the segments which may concentrate «interesting investment opportunities» are logistics, student residences and the development of rental housing dwellings, highlighted SAREB’s representative.
Investment drops, but business continues…
It is a fact that Iberian real estate investment slowed down during the second quarter (-40% y-o-y). But the good start of the year made up for the fall and the final numbers concerning the first semester were positive with 6.65 billion euro (+15% than last year). The data was revealed by António Gil Machado, director at Iberian Property, who also remarked the evidence that business continues in Portugal and Spain.
Paula Leon too, mentioned that, despite the real estate market’s fundamentals remaining the same, there will be new «opportunities on the market in the coming 18 months». And she also advanced that within two years, «new players are expected on the market».