The information was advanced by Adolfo Ramírez-Escudero, Chairman at Capital Markets EMEA and CEO Spain at CBRE, in an interview to IP within the segment Iberian Property Investment Talks, during which he further revealed that, on the short-term, companies will adopt defensive policies to manage their balance sheets, different Capex’s and should adopt different investment strategies. The focus will be on core assets, value-added assets, restructuring assets and vulture approaches, seeking discounts which in some cases (such as terrains) may reach 50%.
Despite the distribution chain’s structuration in Portugal and Spain and the companies’ financial leverage – which is the result of the real estate’s good momentum of previous years –, the future remains uncertain. «The long-term results depend on the duration: on whether this will be temporary or structural», explained CBRE’s CEO for Spain.
It is certain that «investment volumes will drop in 2020», with expected decreases of 20% and 30% in 2020 on the European real estate market. Nevertheless, Adolfo Ramírez-Escudero says he is «optimistic that the measures adopted by the Governments will have a severe impact in 2020, but that there will be recovered in 2021».
Governments’ measures are following the right track
Measures implemented by Governments, both in Europe and the rest of the world, to face the Covid-19 crisis’ economic impacts «are on the right track». One of them is to «offer liquidity [to companies] while we navigate the shock of demand», he revealed.
This is particularly important for the tourism segment, which in countries like Portugal and Spain has an enormous impact on the economy. «We must prevent companies from this segment from bankrupting and it is thus very important to offer them liquidity at the right time», defended Adolfo Ramírez-Escudero. But he remarked that this is «a temporary measure and that offering companies liquidity may not be enough».
Despite the coordination between monetary, tax and public healthcare policies being positive, the great challenge for the future is the return to activity, to the «new normal». According to Adolfo Ramírez-Escudero, this process is directly connected to the public healthcare measures and the way people tested positive for Covid-19 are tracked, for example. For the CBRE’s CEO for Spain, this is an important step «so that we can ensure a safe environment» and «create the confidence to reopen the borders as soon as possible so that we can help the tourism segment come back to action».
