Lexidy discusses the impact and opportunity of the Coronavirus on the real estate market in Spain
Spain is known to be a top destination for Real estate Investment ! However, with the news and social media inundated with stories regarding the coronavirus, it can be difficult to sort the hysterical talk from actual fact. What will be the impact of COVID-19 on the real estate market? What we do know to be a fact, is that uncertainty will become critical – liquidity could dry up and impact both debt and equity in the real estate market in Spain and worldwide. It is however wise to bear in mind that there is always an opportunity window to find for those who seek it.
Understanding the new scenario
Todays Reality presents unprecedented changes and challenges that will affect the market at every level is of utter importance. It is a given that COVID-19 might just be the triggering event for a recession. For example, people will avoid social gatherings and large groups. Hence businesses, such as restaurants and retailers, looking to expand may have to put that on the back burner.
But, what about investors looking for opportunities? Does this scenario present any advantages for investors in the real estate sector?
In the immediate term, the investment climate for transactions and acquisitions has remained reasonably fair. However, fear factors are on the rise. In the forefront of people’s minds we find fear of an economic downturn. And yet, even in such a scenario, most remain optimistic.
The big question : Will the virus affect the Spanish real estate market?
Travel restrictions and fears of exposure to COVID-19 will mainly affect face-to-face meetings. The pattern indicates that investment decisions will be the first to suffer, whereas residential real estate decisions, which are more emotional, don’t experience the same shocks.
“We tend to support a cautiously optimistic view, expecting to see signs of recovery within the next months.”
-Antonio Torres Valdés
COVID-19 has the potential to trigger what experts are calling a “correction recession”. In other words, a recession that will help leverage an unbalanced market. In this case, experts say it has been long overdue for over-inflated asset classes and would spark opportunities for buyers. Such optimism was fuelled by strong liquidity and cash flow, as well as real estate being the number one safe haven for money in times of negative interest rates and insecurity.
How can Lexidy help you?
Our experienced Real Estate lawyers are ready to help you. We understand real estate in Spain can be challenging. Lexidy is here to offer our full support as your legal trusted partner. If you’d like to know more, contact us here