The warnings about the end of the change in the economic cycle put the real estate sector on guard. The conjunction of a war conflict at the gates of Europe, which has triggered an energy crisis, unprecedented inflation in decades and a rise in interest rates at an unprecedented speed lead to a bad forecast for GDP this 2023. Although the forecast is that Spain grows above its European partners (1%), the winds of global recession do not invite rushing.
Everything indicates that investment in real estate will have two different periods this year, where the first six months will mark caution and demanding monitoring of consumer behavior in the face of the Euribor escalation. Although this does not mean a stoppage in activity, Savills anticipates that it will not be until July when the dynamism of the market will take shape. “The first semester will still be ‘wait and see’, but there will be a crossover of operations in the sectors with the most interest and where the demand is strongest,” the consultant’s experts specify.
Direct investment broke a new record in 2022 The figure is 38% above the level recorded in 2007, before the bursting of the real estate bubble. “It has been an atypical year due to the performance of the last quarter, in which we have continued to see operations, because unlike other cycles, prices are correcting more quickly as the type of property has changed, now in the hands of institutional investors” , says the executive director of Capital Markets at Savills, Gonzalo Ladrón de Guevara.
Despite this, the majority of the sector has already detected a deterioration in investor confidence, the effects of which will translate this 2023 into a slowdown in activity that is increasingly “evident” given the exhaustion of the expansive phase, the increase in rates and the intention that the European Central Bank (ECB) continue with this monetary policy in the coming months. Added to these factors is the scarcity of land for finalists or the increase in construction costs, for which a moderation is already expected, in line with the CPI rate. From the Inviertis platform, its CEO and founder, Rebeca Pérez, is more optimistic and defends that the investment will remain supported by the excess liquidity that still exists. Pérez believes that the price falls will be slight and, in any case, they will occur by area.
The real estate sector began to wake up from its nightmare in 2014. A report prepared by CaixaBank Research does not contemplate a “notable” price adjustment. However, when analyzing by segment, office assets may bear the brunt, as they have narrower returns, together with logistics assets, which are more sensitive to the deterioration of the macroeconomic environment. In the commercial niche, for its part, prudence will prevail in the current scenario.
Impending house price crash
Where there is no doubt is in the residential area, where the consensus on a fall in prices is broad. The real estate portal Fotocasa estimates the expected decrease in the volume of purchases for this 2023 of the purchase at 12% before the Euribor suffers a higher price, and the brick shield as a refuge value against inflation. “Both large and small individuals are now betting on housing as a protection to prevent their savings from being devalued and they have launched to invest when they perceive this market as safe,” says the Director of Studies and announcer for Fotocasa, María Matos.
According to the National Institute of Statistics (INE), a total of 51,615 operations were recorded last October, its best data in that month in the last fifteen years, when the level of purchases reached 58,500. This translates into a year-on-year increase of more than 11% that shows the ‘rally’ that it has experienced with records not seen since the last months of the ‘boom’. Facing this exercise, CaixaBank Research estimates a fall of close to 20%, up to 480,000 units in the annual calculation, compared to the almost 600,000 expected in 2022, a figure that in any case would be higher than the 2007 average. new construction, a problem that has been perpetuated in recent months.
