François Carriere, CEO of international estate agents Coldwell Banker Spain & Andorra, shares his thoughts on the impact Covid-19 is having on the Spanish real estate market.
François sent me his comments on how the coronavirus pandemic is affecting the property market in Spain, and other European real estate markets like Portugal, France, and Italy.
Starting with a general observation on how all markets are responding, he said “there is no doubt that Covid is affecting the real estate market today in Europe and all over the world, but when we look at the data we see the impact is not so much on price but more on how people think and behave, and what a HOME means for them. The pandemic is having a notable impact on the way people search for and view homes.”
Turning to Spain, which François points out is one of the countries in Europe that has suffered the most in terms of infections, deaths, and the economic consequences, he reports that his agents are “seeing a drop of between 5% and 10% in prices, generally speaking”.
The biggest impact has come from the decline in foreign demand, as buyers from abroad have been unable to reach Spain for much of this year. On the other hand, local buyers are “still active and looking for opportunities,” with a notable increase in demand for second homes in rural areas and the mountains.
In the areas and market segments that rely heavily on foreign buyers they have seen three quarters of that demand suppressed over the course of the pandemic so far.
Some sales activity has moved online, but most buyers still need to visit in person before they purchase, so travel restrictions are a bigger obstacle in property sales than have been seen in other categories.
The absence of foreign buyers in the market has “put the high-end segment in stand-by mode”. This, along with the lack of tourists, has been keenly felt in the upmarket Balearics, especially Ibiza.
The suppression of tourism this year has had a predictable impact on the short-term rental sector, with occupancy rates much lower this year than normal. In cities and other areas not so dependent on holiday-rentals “many owners have switched to “mid and long-term rentals offering a significantly lower return.”
Suffering alongside the holiday-rental sector is the hospitality industry “in crisis but supported by loans from both the government and banks,” at least for the time being. “We expect excellent opportunities in the hospitality field in the coming months,” says François.
“There is no denying the important drop we have seen in market activity, but we expect a strong recovery when we turn the corner,” concludes François.