Investment in real estate will probably be one of the winners of the current economic crisis caused by the Covid-19 pandemic.
That is the opinion of the CEO of Millennium BCP bank, Miguel Maya, who was a keynote speaker at the 1st Real Estate Development Conference in Portugal (September 8) and who pointed particularly to the residential real estate sector as a priority area for the economy.
“Not all sectors are feeling the crisis in the same way, because the measures being undertaken, and that will be taken, will place some sectors as probable winners – one such will clearly be the real estate investment sector,” said the BCP leader at the online event organised by the Portuguese Association of Real Estate Developers and Investors (APPII) and Vida Imobiliária.
According to Miguel Maya, the pandemic “is not having a negative effect on the price of residential real estate either in Portugal or in Europe and the United States” because “mortgage credit has contracted but demand is still steady” and because “people understand that the crisis was the result of a pandemic and that there are strong indicators that the economy will bounce back after a vaccine has been found”.
“Forecasts regarding the development of product and employment suggest that investment in housing will remain strong,” he said, since supply in Portugal is “not excessive”, and so a fall in house prices would be “unlikely”.
“Prices have gone up in recent years, and that was particularly down to the effect of the recovery from the last crisis. I do not go along with the idea that there is a property bubble cutting across the real estate market in Portugal,” explained Miguel Maya.
Furthermore, he said that since the “interest rates are very low and have been within a long and elastic time frame, savers and investors have been channelling their savings into investment, particularly real estate investment.”
On the question of shops and offices, Miguel Maya said he was “more cautious” and “less enthusiastic”.
“This crisis is speeding up trends (already underway) and we are seeing a strong increase in digital interactions and probably also changes to the working models of the past, with a greater emphasis on teleworking and working from physical locations that are more widely spread,” he explained.
The bank CEO also predicted more investments in infrastructure and logistics support since “support in the area of energy transition and efficiency will stimulate investment in real estate”.
“Projects involving rehabilitation that place emphasis on environmental sustainability will have an added opportunity and will be eligible for more favourable credit conditions and I can assure you that we will continue to be interested in studying the projects of clients and supporting them when those projects are viable and have adequate own capital structures,” said Miguel Maya.
The banker also called on extending moratoria on credit for those sectors of the Portuguese economy that have been most affected by the pandemic.
Miguel Maya warned of the very serious repercussions if this was not done, not just for companies but for the country as a whole, which risked having its credit rating downgraded by the ever vigilant ratings agencies.
“It should be obvious that given Portugal’s very high level of public debt and other limitations, that one of the top priorities should be to extend the grace periods on loans for some activity sectors, especially those which cannot stockpile what they produce: no one is going to buy plane tickets that were not bought or used in 2020 or empty hotel rooms or cancelled room bookings; this is cash flow that has been lost,” he said.
By CHRIS GRAEME/ESSENTIAL BUSINESS