It seems that months have already passed since the end of the state of alarm, when we see again the streets full of people – many of them already physically back to work – the terraces of the bars crowded with people consuming (it seems that everything that has not been done in these three and a half months of confinement) and thinking about where to spend the “longed for and deserved holidays”. In short, an almost “normal” month of July. However, we have only been in this new normality for two weeks and this situation could be considered by some as a mirage.

If we leave aside the euphoria we are experiencing at the moment, which is the result, as I said before, of the confinement we have been forced to endure and the psychological and partly economic need to return to normality, the reality is that we are still on a “war footing” and any false step could lead us to a new confinement, which would mean unprecedented economic damage, as it would take place so soon after the first one. Such is the uncertainty of what may happen at the return of the summer, that we are already beginning to see the real estate market begin to take action.

As if the world were ending

I have always said that, in property investment, there are two times of the year when it seems that the world is going to end: one is December, coinciding with the change of calendar year and in most companies, with the accounting close of the year, and the other is July, when with the start of the summer period it seems that what you don’t do before the summer (like bad students) can no longer be recovered in September. This year, in the month of July, the situation is repeated, but if there is one fact that stands out from other years, it is that the feeling among many of the players in our sector is that the transaction that is not closed before the end of July will already be very difficult to close in the fourth quarter or at least, under the same conditions.

And why is this? Mainly because of the uncertainty to which I alluded earlier, not knowing whether we will have to go back to confinement or not, with the economic consequences that this could have, but also because of the real facts that can already be seen, such as the insolvency proceedings that are being filed, the new renegotiations of rents that are being requested by the tenants once the period of deferment or bonus has ended during the months of state of alarm, seeing that their businesses have not recovered despite being open again, the end of the ERTES as well as the end of the deferments of credits granted and another series of events.

This whole scenario should put us “on guard” against investment opportunities that may be being taken into account by real estate portfolio analysts, at this time. On the other hand, either because of present or future liquidity needs, or because of the understanding that the capital value of the real estate asset could fall in the short term, the figure so often used in the previous sale and leaseback crisis is beginning to recover, in other words, sale and leaseback, despite the difficulties this figure had encountered with the application of NIIF 16, which came into force last year. In short, there is movement in the sector.

Moments of opportunity

Having said this and despite the current circumstances of uncertainty, a moment of opportunity for investment is opening up and one of the maxims we must follow is prudence and analysis of all possible scenarios. What technicians call W recovery could come into play, which would mean returning to the pre-covid situation within at least two years, after a hard fall that could take place at the return of summer . As a sector colleague whom I hold in high esteem and consider to be an intelligent man says: “we are on a roller coaster and at this moment, we could be at the top of it”.