This is the prospect from Cristina García-Peri, Head of Business Development at Azora, who further explained, during the segment Iberian Property Investment Talks, that the factors which determine success in this segment are gathered on both the side of demand and offer. If, on one hand, during these times of uncertainty «people will prefer to rent rather than buy houses», on the other hand, «real estate will remain as a fantastic alternative for investors, and, as such, there will be a lot of money which will return to all the different market segments». Under this scenario, «housing rental will certainly come out on top», she believes.
This is, actually, «a good opportunity for countries to focus on not only international but also national investment», assured Cristina García-Peri. But in order to do that, we will need «more public-private cooperation programs, through which the public subsidises the terrains and the privates build houses for the rental market». An efficient acceleration of public administrative processes – which can be done through digitalisation – is another factor which will help attract investment.
Leisure Hotels vs Business Hotels: a two-speed recovery
In terms of the hotel segment, one of the most affected by the Covid-19 crisis, the Head of Business Development at Azora believes that leisure hotels should recover faster than business hotels.
The reason for this is that the remote work conditions now allow for meetings with such quality that companies won’t feel the need to meet in person. This type of meeting was «the first thing companies cut off in these uncertain times», she remarked. And, thus, this type of hotels should see their occupancy highly reduced in the long-term.
The leisure hotels, on the other hand, may recover at a greater speed, since people should start travelling again as soon as they are convinced that sanitary conditions are assured by the units, such as minimal distancing in the hotels’ and restaurants’ common areas.
In order to maintain the hotel businesses it is «important to guarantee the continuity of the economic support» currently offered by the Governments, assured Cristina García-Peri, stating that, even if «hotels return to their activity, they will not have the same occupancy rates as last year and will, consequently need support».
Nevertheless, there will be cases in which the owners and operators will not survive the crisis, since the «Summer season will be short in some countries, making it impossible to support the costs», she advanced. Thus, some owners will be forced to place their assets on the market and, for that reason, the Head of Business Development at Azora revealed that she sees the hotel segment «as an investment opportunity».
Uncertainty hovers over asset valuation
The uncertainty caused by the current situation seems to hover over the asset valuation as well and, according to Cristina García-Peri this is really «expanding the offer that exists naturally within the market».
Under this scenario, «most investors are waiting», because «there is great uncertainty concerning the assets’ prices», since today’s market lists, «do not reflect the real impact the crisis will have on the buildings’ prices» she explained.
Both buyers and sellers seem to show caution in their processes, awaiting further developments. «It should take months for buyers to be more comfortable in assessing assets and, on the other hand, for sellers to feel that the assets have the right value», highlighted Cristina García-Peri.
The truth is that «opportunistic investors are already on the market looking for opportunities», she alerted. But they should only carry out operations when the assets’ assessments show discounts between 15% and 40%, depending on the type of asset. Nevertheless, Cristina García-Peri does not believe «there will be many transactions of this type».