As large parts of the world have gone into lockdown and only vital services and industries continue to operate fully, we are all wondering how it will all affect the economy, and with it our livelihoods.
Those who can work from home won’t feel anywhere near the impact experienced by the tourism, restaurant, events, retail, transport and leisure sectors, which have seen a sharp and sudden decline in business due to the strict restrictions on travel and movement.
In terms of the negative impact, a lot depends on how long the current situation of ‘freeze’ will continue; if countries come out of it within little more than another month, the damage will be limited and recovery quicker, but if it takes much longer (as all experts expect) the impact will be so much greater and the recovery will require more time. Government packages are aimed at increasing medical treatment capacity, providing financial support for people and smaller businesses in the meantime, and afterwards will begin to focus on measures to ameliorate the damage done and stimulate the economy back into action as fast and smoothly as possible.
Happily, we are beginning to see the effect of the quarantine, as first China and now also Italy and Spain are beginning to register a declining number of new cases, and in the same way the negative impact on the property market is likely to usher in a much-needed period of reflection and cooling off. Construction volumes and prices have been rising too rapidly, thereby already putting pressure on demand, but a downward dip resulting from the after effects of the coronavirus is likely to lower the number of highly speculative projects and lower prices enough to draw value back into the market – and with it, make it more attractive for buyers and also investors again.
What is true for end users is true for investors and developers; a real reduction in overheated land and construction prices will enable the latter to maintain reasonable margins while lowering prices, and this can only be good news for private and commercial buyers of all kinds, may they looking for an investment, a permanent home or a holiday property. It will give the real estate market a chance to reboot and become more realistic for all involved, especially in terms of volumes and prices. Move Project works closely with professional property funds and developers, including important creators of student housing in Spain, and here too prices and rents will drop and will reset as a result of the current crisis.
It is a development that we won’t see the main results of before spring 2021, but one that provides a welcome rebooting of the sector that will benefit developers, investors and above all, consumers, as greater value and growth potential returns to the market.
One thing is certain now: We won’t start again where we left off!