In Spain, Ibex 35 drops
The stability the Madrid Stock Exchange index has been showing for months was ruined with the arrival of the pandemic. Despite some fluctuation, the Ibex 35 clearly started a downward trajectory since mid-February and reached the lowest value of the last 5 years this Monday.
This index includes some of the main Spanish REITs, such as Merlin Properties and Colonial, which have also seen their stock drop around 10% this Monday. Banks also had equally significant negative variations, such as CaixaBank, BBVA, Bankinter, Sabadell and Santander.
The impacts on the companies should only be assessed during the second semester. According to Mark Ridley, Group Chief Executive at Savills, «as a result of the dynamic situation in respect to COVID-19 it is difficult to accurately predict its impact on our business for 2020 as a whole, although we do expect a greater weighting of activity for the second half of the year».
Despite the current climate of uncertainty, the CEO recognises that the company had «a good start in 2020 with the first two months outperforming the same period last year on all measures». Now it is time to continue to «monitor the impact of global uncertainties on investor and occupier demand for real estate», reveals the directive in the presentation of the preliminary results for the full year ended 31 December of 2019.
In Portugal, the foreign investment might drop
Portuguese professionals from the sector recognise that despite still being early to truly measure the impact of the pandemic on the country’s real estate market, its effect is already felt and there are already forecasts.
The pandemic’s impact may occur on three distinct levels, according to Hugo Santos Ferreira, executive vice-president at APPII. First, there might be a negative impact on the attraction of foreign investment. Then, there may be delays both in delivering ongoing real estate projects and in occupying the buildings. Lastly, «there will certainly be a negative impact on sales, with buyers, both foreign and domestic, naturally postponing for an indefinite period their acquisitions, with a focus on the housing segment».
The current scenario might lead to «placing houses on the market at lower prices», recognised, Luís Lima, president at APEMIP, in an interview to radio TSF. He also mentioned the break-in domestic and foreign demand.