COVID-19 strikes health and the economy. How the entire construction value chain will be affected and what will happen with the closure of businesses
The real estate sector is concerned about the consequences of coronavirus pandemic and the measures adopted to contain the progression of the disease. In this sense, they predict a dark future outlook, as a consequence of the tightening of the quarantine and the new rent law, which began to take effect this Wednesday.
In this sense, the architect and real estate developer Horacio Ludigliani drew up a grim diagnosis how the entire c will be affectedadena of construction value and what will happen with the closing of shops.
“The economy also kills,” Ludigliani shot when asked about the closure of real estate, notaries and other activities related to the construction sector.
“Like an imperceptible virus day by day, Pymes that close their doors are on the road. There are no indexes of dead and recovered companies. Only infected and deceased as if the economic collapse did not imply loss of life, “said the architect and real estate developer.
Real estate operations fall worryingly
For this reason, the real estate expert claimed “quickly balance health and economy“and remarked that” the twists and turns without a predictable plan generates an uncertainty that not only impacts the economy, but that health suffers as well. ”
“When talking about economic rebound it must be said that it will only bounce if those companies still exist, “he said.
“The rescue measures that are announced do not really reach those who need them. And banks do their best to avoid that bailout. Also the intervention of private companies further retract the meager investments that could come from abroad. ”
“This last effort will be the last stab for him closure of companies and shops. It is imminent to allow the activity to begin with all the care to avoid that those with the highest purchasing power or with the rest of the financial resources keep goods and companies that they could not invoice in the last hundred days, “he concluded.
Eight of ten real estate companies did not complete operations in May
A report prepared by the Real Estate Observatory of the Chamber of Real Estate Services Companies (CAMESI) reveals that 80% of the activity continues to be paralyzed due to the restrictions imposed by the Covid-19 pandemic.
The partial opening of operations in some jurisdictions allowed a minimal rebound, both in rentals and in sales-purchases, but Eight out of ten real estate companies could not close any operation.
“We are facing an unprecedented crisis in the market and we believe that government measures are being imposed that include a broad moratorium, access to soft loans and a strong presence and support of the State in the economic, financial and commercial aspects” , evaluated the president of CAMESI, Alejandro Ginevra.
The first data that appears among those consulted is that the vast majority continue without specifying any type of operation, despite the fact that activity was resumed in some jurisdictions and that in-person visits to vacant buildings were authorized in the City of Buenos Aires.
In May, 21% of respondents were able to complete a rental operation, which represents a significant increase in relative terms compared to the previous month (9%) but reflects that the vast majority of respondents continue to register no operations.
Similar panorama occurred in the Purchase-sales line: just 18% of real estate companies closed a transaction (7% had done so in April).
Eight of ten real estate companies did not complete operations in May
The report also shows that 43% of operators were unable to fulfill all the services of their company and 61%, with the total payment of their obligations.
Specifically, 60% of those who pay salaries are not being able to meet the full payment of their salaries to their employees. And 48% of those who pay commissions were able to do it in full.
Regarding the rent payment by tenants during the past month, just over half (52%) was able to pay the entire rent, while the rest made partial payments.
The method of payment is maintained through bank transfer, reaching 40 percent of the total in May. Thus, there was an increase of more than 10% in the fulfillment of rental payments and the level of collection by transfer was maintained, which indicates that the partial release of the activity facilitated the fulfillment of this obligation to the tenants with circulation.
Precisely, the opening of the activity in some jurisdictions and the authorization of face-to-face visits to unoccupied properties during the last month in CABA -which records in the measurement a guarantee of 97% of the operators-, positively impacted in some indices.
For instance, the payment of services and taxes improved 3% in compliance with respect to the previous month. Compliance with commission payments also increased by 4% compared to April. During May, the total payment of credit cards by operators increased by 7% and their participation in advertising services increased in the same number.
On the other hand, almost 60% of those consulted recorded an increase in the supply of commercial premises, especially in urban centers with large circulation, which denotes a deep crisis that the economy is going through.
For Ginevra, “the role of the State, also in our activity, is essential to reduce the margins of uncertainty with which we operate today, which do not allow us to plan the least at the immediate level.”
In that sense, he considered “urgent and necessary” official policies that “allow immediate stimulation, obviously maintaining the objective of prioritizing health over the economy. Specifically, a wide moratorium is imposed, access to soft loans and a strong presence and support in the economic, financial and commercial areas. “
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