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"Governments are using strong fiscal policy stimulus"
05 May 2020 |

In order to handle the impacts of the crisis, several measures have been implemented by Governments all over the world. Miguel Ferre, Vice-President of Global Corporation Centre EY&IE, considered that, besides monetary policies, «governments are also using strong fiscal policy stimulus, to help lessen the crisis’ impact».

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«Initially, fiscal measures aimed at healing the system, but many governments did not stop there, and required more government expending and tax cuts. So, these measures are directed to companies which are exposed to this crisis», he explained in an interview to Iberian Property Investment Talks.

Within the real estate sector, specifically, measures are «focused on fiscal policy responses to the damage caused by the crisis on tourism and hospitality, while being cautious concerning any and all assessments». According to him, «We must implement changes to real estate policy in order to reduce the burden of tenants and in some cases, there are already some regulations in place for the landlords».

But he alerts that «those changes should be temporary and limited to a few months. When the healthcare system emergency state is over, regulation should go back to the situation prior to the crisis», he remarked.

Monetary policies have been «crucial for the whole economy»

On monetary policies, Miguel Ferre considered that the «response from policymakers, like Governments and Central Banks, has been substantial. I think that is a positive response, but it probably is not enough», he admitted.

One of the monetary policy measures concerns the 750 billion euro package made available by the European Central Bank to mitigate public debts during the crisis. Another measure concerns the 540 billion euro guaranteed by the same institution to face the crisis by supporting workers, companies and member states.

For the Vice-President of Global Corporation Centre EY&IE this type of support will be «crucial for all the economy and in particular for the real estate sector and even more in particular for the tourism segment». Nevertheless, «these measures are likely to be the final response and I still expect that governments will issue additional funding once the (extend of down-town)(?) becomes clear», he added.

«Hotels will be a safe investment in the long-term»

Despite the hotel segment currently being «more impacted by the Covid-19 crisis, with total lockdown and cancellations in many countries», investment on this segment «will be a safe investment in the long-term», believes Miguel Ferre.

Nevertheless, his short-term prospects are not encouraging. «Portugal and Spain are more than ninety percent dependent on air transport, and the biggest concern until the end of the year will be how we can recover the level of tourism. I am not optimistic at all. It is very clear to me that there is a lack of confidence within the tourism segment, services and consumers. This is the reason why the hotel segment was one of the first commercial property segments to be affected by Covid-19».