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Investing in assets which offer good returns will be key for the economy's recovery
18 May 2020 |

Investment in real estate should be one of the catalysts for the recovery of the economy. For Sandra Daza, General Manager at Gesval, «one of the fundamental issues in terms of recovering the economy is investing in assets which offer good returns».

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She believes that «these investments offer security on the mid and long-term». But in order to guarantee it, «it is necessary to minimize the impact of the suspended rents at this moment when there are different types of moratoriums on rents, especially in the housing, retail and office segments», she remarked on the segment Iberian Property Investment Talks.

But there are other variables on the equation which will dictate the future of the sector. «Pricing evolution and the pace of recovery will depend on the balance between the new offer on the market and demand’s new needs», highlighted Sandra Daza, who further assumed that, in the near future, «there will be variations in terms of the criteria for demand when it comes to spaces, locations and professional requirements such as remote work».

There should be several players seeking to invest in the Iberian market in the coming months. «Investment funds and REITs should play a significant role in the recovery of the real estate market», believes the General Manager at Gesval, who further revealed that «the more active investors will be the ones who relaunched the real estate industry between 2017 and 2018, who now see opportunities increase and want to return to the market». On the other hand, «we should also consider the potential of core and core-plus as well as private investors, who have, during the last few months, shown interest in the rental market».

«We are confident that the recovery will be quick»

Although it is still «too early to specify or estimate» how long it will take for the market to return to the numbers of the end of 2010, «at Gesvalt we are confident that the recovery will be quick and, as such, we will soon reach the point where we were before», advanced Sandra Daza.

But this recovery will not be equal for all segments, she alerted. The office, logistic and housing segments will recover in just a few quarters. For retail, the situation might be «critical and it could take a long time to recover».

The hotel industry is also in «a very complicated situation since it is being much more impacted by the sanitary crisis. And, as such, we expect that this segment will take between 1 and 2 years to return to normal», she revealed. This industry actually needs «urgent measures» in order to face the coming months. «We haven’t seen, until now, any specific measures for this segment in order to reduce damage. We hope that Governments will implement all measures necessary to save the tourism industry as soon as possible since it is such a relevant industry for our countries. Tourism is a key segment both for Portugal and Spain», remarked Sandra Daza.

On the other hand, the alternative segments’ situation is «completely different». This type of assets «suffered greatly with this pandemic, but their recovery will be quicker, and it might have no more than a slight impact on their returns» when it comes to the final balance, she explained.

Asset evaluation is a «very difficult» issue

On asset evaluation, Sandra Daza confessed that this is a «very difficult» issue. «We have 16 offices and more than 400 appraisers in Portugal and Spain. Faced with this macroeconomic situation, we must wait to see which direction the restructuring will take and its impact on yields and returns. The situation is still on hold», she explained.

But, according to Sandra Daza, the company specialised in Real Estate Consultancy and Assessment is already taking measures. «At Gesvalts we remain prudent and analysed the guidelines from the industry’s regulators», as is the case of the Bank of Spain which has suggested several changes in terms of assessment criteria due to the current situation.

Among the several factors that need to be considered for the evaluation reports is the urgency of each case, security and protection, the review of the market’s indicators, risk analysis and real estate ratings. «We are working very closely with our clients in order to understand their current situations so that we can provide more accurate assessments», she revealed.

On the future, «we have to wait and see the evolution of the situation and its impact. It will depend on how long it will take to go back to normal». But at any rate, Sandra Daza reinforced that «ours is a very interesting market in terms of investment and it will continue to be a good market to invest in. We expect to have many investors in the coming years».