The voices of the sector believe that, despite the difficulties, companies are better prepared to face this pandemic.
The coronavirus pandemic has dramatically changed people's lives. It is still difficult to predict the long-term impact of this outbreak, especially since no one knows when it will end yet. The effects on the global economy are taken for granted, and it will be difficult to escape the world recession. In the real estate market, the spirit is optimistic but cautious. Six industry experts in Portugal met this Tuesday, March 17, 2020 for an unprecedented online conference on the future of the real estate and the impact of Covid-19 on Portuguese real estate. The spirit is unanimous: difficult times and, at the same time, times of opportunity are looming.
Facing a virtual audience of almost 1,000 spectators, Portuguese real estate experts tried to reflect on the current moment, the medium and long term consequences of this outbreak in the sector and to answer the many doubts of those who make real estate business their life. The conference "The Impact of Covid-19 on the Real Estate Market", organized by the Portuguese Association of Real Estate Promoters (APPII) and Vida Imobiliária (Vi), was attended by promoters, members of the Lisbon City Council (CML), real estate agents and a Director of the Specialized and Real Estate Credit Department of Millennium bcp.
Throughout the debate, the experts were positive, trying at every moment to convey words of tranquillity to those working in the sector. There is no doubt about the negative impact that this virus will have on the economy, not only in Portugal, but in the world, but they also completely remove the scenario experienced in the last crisis. They believe that the real estate sector is better prepared to overcome this obstacle and that its future will also depend on the duration of this pandemic. Even so, new opportunities may arise, even in the face of difficulties.
Promoters, mediators and banks: what do you think of this moment?
Hugo Santos Ferreira, of APPII, in permanent contact with various investors, said that "on the side of investors, especially those who invest in Europe, and particularly in Portugal, there is a cautious vision of optimism". They are apprehensive, especially for next month and beyond, since it will be difficult to escape a negative impact that will be widespread throughout the economy. According to the official, investors predict that within 12 months, "if all goes well," the sector will be able to recover. He also took advantage of the moment to convey "a word of tranquillity" to all participants.
On the banking side, José Araújo, from Millennium bcp, left the note that "banks are much better prepared today for any crisis that may happen". "This virus issue could be a short-term one, hoping it won't last more than 2 or 3 months, and then return to normal. He went on to say that some measures being prepared by the European Central Bank (ECB), such as extending the period of obligations that entities would have to comply with, could help.
The promoters say they are concerned, but mainly focused on the recovery and opportunities that may arise. "Within the company the spirit is one of serenity and patience, we are committed to overcome this inconvenience and put efforts into recovery," said Pedro Vicente. A feeling shared by José Cardoso Botelho, when asked whether the fact that the company he leads is positioned in the premium segment may bring increased risk and uncertainty.
"We are in a premium segment and, at this time of uncertainty, we think we are well-positioned. As we have a direct sales force this also helps us, but in the last few days, we have found that three or four customers in Asia have cancelled their bookings, and European customers have asked to postpone signing a promissory contract. This does not translate into cancellation of interest, but a delay in doing business. We are confident that we will resolve this situation," he said.
Is the real estate industry ready or not?
The answer was unanimous. Experts agreed that companies in the sector are now better prepared to face difficult times. Above all, they are more professional than before.
"We think that this is a very different situation from the one we experienced in the previous cycle. The control of this epidemic may take some time, but it will be controlled. I believe the effect will be less severe. Despite everything we continue to do deeds, they have not been cancelled... our great concern is that this situation will drag on in time," they add.
"Companies are better prepared, the promotion sector has become very professional in recent years," added Hugo Santos Ferreira, but he warned of the need to present emergency measures, particularly with regard to taxes, since the "bottleneck in the treasury of companies will be a reality.
José Araújo also reminded foreign buyers, who have been buying mainly through plants, that "we hope they will guarantee their continuity". "If the market takes longer to recover, this may be the main threat to promoters," he said.
Despite being optimistic, Pedro Vicente did not fail to remember that, although more prepared, "many Portuguese companies remain decapitalized and depend a lot on foreign investment".
Waiting on licensing, an eternal problem
Waiting on licensing was a problem long before the pandemic came. But it can get worse and condition the realization of the projects, according to the experts. Ricardo Veludo, CML councilman, was asked if this moment will imply even more delays in the processes and answered that at this moment CML is "finalizing the organization of workers" since 95% of them are in telework.
"This is a new reality to which we are adapting. But we are going to join forces to continue supporting the normal activity of real estate and construction", he said. He also added that they are not doing a "blind application of the administrative deadlines", namely in the delivery of the necessary documents, so that people can also organize themselves.
More than ever, he said, the goal is to implement the digital urbanism project, so that it is increasingly possible to dematerialize processes".
Will renting again gain dynamism?
Local Housing is experiencing a dramatic scenario these days. According to Hugo Santos Ferreira, this will be (already being) one of the most affected segments, as will the hotel industry, since tourism will see its numbers plummet.
Pedro Vicente pointed out that there is "a non-professional LA fringe", operated in a family way, and that "these units will pass to the rental market".
Hugo Santos Ferreira recalled, in spite of everything, that this market needs to be credible if we want it to regain its dynamism. "The lease has been changed more than ten times in the last decade. We need to stabilise it from a legislative point of view", he concluded. The head of the APPII also left a list of measures he considers essential so that the impact of the pandemic on real estate is not so negative, including exemption from IMI due by the end of the year, exemption from IRC to be paid in July, simplification of procedures in municipalities, cash support lines, for example.
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