This conviction is from Pedro Coelho, Chairman at Square Asset Management, according to whom «if there are any certainties in these uncertain times, it is that the tax rates will remain low, or even lower, for much longer». And despite admitting that the real estate sector might have lower returns in the coming future, during «a period expected to be short», this sector will remain a choice when compared to other more volatile financial products.
Pedro Coelho was speaking to VI, for the magazine’s new section «Conversas Diárias – Especial Covid-19» (Daily Talks – Special Covid-19), where he attested that «with the country at a standstill, real estate is also at a standstill. There are a number of sectors which can respond almost normally with their activity, but others are heavily affected, such as the more commercial sectors, except for primary services, but all others are going through a very hard time».
He further explained that «shopping centres will initially feel the biggest impact, since they are practically closed and we are following the situation daily with our property managers». He admits some breaches occurred during the month of April, but he guarantees that, like in 2009, the solution is to «manage case by case with the companies. It is important to negotiate in order to support the private companies, so that they can recover».
«It is important to understand how long this will last. If it’s quick, economists believe there will be a significant break right now, followed by an equally quick recovery, on several levels, including in real estate. But the period could also be longer», believed Pedro Coelho.
He further noted that despite the fact that «we are treading unknown paths» and that control of Covid-19 «is a marathon, not a race. We must have cold blood».
Square remains alert to investment opportunities
For Pedro Coelho, the crisis can also bring investment opportunities, and the management company remains alert. «We are alert to new opportunities, but we know that due diligence, as well as assessments will be harder to carry out right now».
He exemplifies as a possible opportunity «global real estate funds with a specific allocation to real estate which benefitted from bailouts», and which «will need to reduce that exposure and sell some assets».
He also confirmed that Square currently has «several ongoing due diligence processes, at the final stages, which will be closed as soon as possible».
Concerning Square’s funds, Pedro Coelho advanced that «we have had some bailouts and also some subscriptions, but are loose in terms of liquidity».