The impact of interest rate hikes in the real estate sector focused this morning on the debates at The Distric, which opened today at the Fira de Barcelona with the participation of managers from some of the largest Spanish and European real estate companies . "The fundamentals of the business (occupancy level and rents) are going very well, but the facilities that real estate agencies have to continue financing their operations will mark the future of the sector," summed up Francesco Zanella, vice president of Starwood Capital Group.
David Martínez, CEO of Aedas Homes, stressed that Spain needs to “attract and maintain international capital. Sometimes we don't realize it, but we are a poor country. There is no private capital here capable of financing the construction of housing that the country needs. Not even to contribute the 2,000 or 3,000 million funds that the three large promoters that are listed on the stock market have”.
Pere Viñolas, president of the European real estate association EPRA and CEO of the Colonial socimi, assured that “the future of the sector and the economy in the coming years will depend on how inflation goes. If it is reduced, in 2024 rates will drop and the market will normalize. If everything becomes entrenched it will be more difficult”.
Ismael Clemente, CEO of Merlin Properties, considered that due to the instability of the markets and financing conditions, “we expect three tough years, in which the companies will have to live on the resources we generate. But when rates normalize, the sector will shine again.”
In this context, the companies recognized that they will slow down the investment rate, "although we do not rule out buying or selling assets if opportunities arise," said Miguel Pereda, president of the Lar group.
The directors pointed out the boom in the sector: Colonial highlighted that the occupancy level of its offices is at record levels, more than 99% in Paris, and Merlin that profitability in the logistics sector is at a minimum due to the large demand for quality industrial buildings. Shopping centers, for their part, which suffered a 20% drop in value with the pandemic” are also maintained “because the managers are professionals and have been able to adapt their offer, increasing, for example, leisure establishments, to attract consumers. ” in the face of the situation of street commerce, less professionalized, and which has therefore adapted less well.
Housing has been one of the star topics of debate, in part due to the noisy presence of the protesters called by entities such as the PAH and the Llogaters Union, who have come to enter the room at mid-morning, until they have been evicted by the Mossos d'Esquadra. The protests have led to the fact that no representative of the Generalitat or the City Council have attended the inauguration, since the deputy mayor, Jaume Collboni, who initially chaired it, finally declined to do so
Investors and promoters highlighted that the rise in rates reinforces the need to bet on rental housing. “We have to continue investing. There is more need than ever because the tightening of financial conditions increases demand, especially in locations in the center of Madrid and Barcelona where there are hardly any flats,” said Emilio Velasco, director for Iberia of the investment manager Tikeau Capital.
Beatriz Toribio, general director of the Masteos proptech, highlighted that one of the risks for the sector is precisely the regulatory one. “Private investment is needed to improve and expand the rental park. But if there is no legal certainty, these investments will not materialize”.
Xavier Vilajoana, president of the Association of Builders Promoters of Catalonia, APCE, highlighted the active role that administrations must have to cover housing needs. “The challenge is to create the soil we need. Little is generated, but in addition, urban planning is archaic and inflexible, and in many municipalities it directly prevents satisfying the needs of customers: for example, when the demands for building or parking make it impossible to build coliving buildings”, or because the transfer of 30% for social housing when a building in Barcelona is rehabilitated “prevents transforming the building. You don't get new homes if you just do facade upgrades,” he remarked.
