Coronavirus VS Real estate market in Europe: how will the fight end? Analysis of the current situation and prospects from an expert at JustReal.

The COVID-19 virus, which not so long ago was a local, albeit extremely serious problem in China, is rapidly spreading across the planet and making adjustments to all areas of public activity and business. What is happening now in the foreign real estate market, how is the investment climate changing, how will the situation affect pricing and what prospects await us in the future? Olga Katrich, CEO of JustReal and an expert in the field of foreign real estate, answers your questions.

photo 0.jpgOlga Katrich, CEO of JustReal.

  • Good afternoon The coronavirus epidemic is spreading throughout the world at a rapid pace, the borders of many countries are closed, and many states have introduced quarantine measures. What happens to the real estate market in such conditions?

  • The current moment is unique in that in the markets of all countries that have been seriously affected by the coronavirus, the same thing is happening – the market has stopped, transactions are practically not happening, there are no impressions and are not expected until quarantine measures are lifted at least in most countries European Union and America. Moreover, all segments of the market suffer – both residential and commercial real estate. During previous crises, capital invested in real estate moved from country to country depending on the economic situation in a particular market. Investors entered the UK market, and during the BREXIT unrest, capital flows were redistributed to Germany, Malta and Holland. When the German market began to seem overheated to many and profits dropped to 1-2%, market participants began to boldly explore markets with higher risks and more interesting returns – Spain, Portugal, the Czech Republic. And now, for the first time in the last 70 years, there are no such trends – analysts do not provide forecasts, since there is simply no data for analysis yet; it is also impossible to assess the consequences of such a large-scale crisis for each specific economy. Therefore, emptiness has occurred not only in cities, but also in real estate markets.

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    An empty square in Milan during quarantine. Photo source:

  • Has the demand for foreign real estate fallen, and how do investors behave?

  • One-time demand has certainly fallen, but deferred demand continues to form, although not at such a rapid pace as we saw at the beginning of the year. Now everyone understands that the situation will begin to normalize no earlier than the summer, since in addition to the lifting of quarantines, it will be necessary to wait for the restoration of air traffic and the start of work of European visa centers. But people still continue to leave requests and be interested in new objects, life goes on, and it is emotionally very important to believe that sooner or later everything will return to normal. Many continue to plan summer vacations and want to combine them with viewings of properties. And there is a strong belief that prices will begin to fall and sellers will be more price compliant.

  • In turn, what is happening with prices, is there a decline observed, or is the market still at the waiting stage?

  • Price is always the balance of supply and demand, fixed when a transaction is made, but at the moment there are no transactions being carried out. Therefore, it is impossible to say that something is happening to prices. There are no movements yet, since there is simply no market at the moment in our usual understanding.

  • Of course, in these conditions, as we were able to see, it is quite difficult to make forecasts, but the example of China showed us that if the necessary quarantine measures are observed, taking control of the problem is possible in a relatively short time. Once Europe manages to defeat the virus (or at least control its spread), what changes do you think will occur in the overseas property market? Will investors become more active, or will the accompanying economic crisis force everyone to tighten their belts?

  • Here you need to divide the entire market into several segments. The first segment is the purchase of real estate abroad for vacation. This segment has shrunk quite a lot after 2014; many buyers left, realizing that real estate costs do not end with its purchase. On the contrary, we observed sales of properties in different price categories precisely because people are not ready to pay taxes and utility bills for real estate that they use a couple of times a year. I think that this category of buyers will decrease further, but will never disappear completely.

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    Streets of Cantabria, Spain. Photo source:

    The second segment is the purchase of real estate when moving to a permanent place of residence. Here the situation is the opposite – given the political turbulence in our country, this category of purchases will only increase. Numerous programs for issuing residence permits and passports for real estate investments will spur demand in those countries where there is appropriate legislation. It is possible that new programs will be opened to attract foreign buyers or requirements for investment in existing ones will be reduced.

    The third segment is commercial real estate. This is where the situation will change very much depending on the purpose of the property. The market for office buildings may decline significantly – many companies will continue to keep their employees working remotely if they see that work efficiency does not suffer and costs are being reduced. Judging by how Europe is experiencing quarantine, supermarkets, pharmacies and government agencies always remain afloat. The demand for premises for this type of business is likely to increase.

    There will probably be bankruptcies of companies, including those owning significant blocks of commercial real estate, and this will be an opportunity for large investors to buy out the most promising properties at very attractive prices.

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    Photo source:

  • What are the forecasts for the dynamics of price changes: during the epidemic and after the situation has been resolved?

  • It is obvious to everyone that the drop in demand will be massive and will affect all areas of the economy. Real estate will not remain aloof from general trends. The fall in prices will depend on what category the property is in – residential properties will still be bought and sold, people’s lives will not stop in any conditions, new families will be created, children will be born. Luxurious villas, castles, penthouses, the cost of which is estimated in millions of dollars and euros, are unlikely to become much cheaper in agent listings, but during personal bargaining, sellers will be more accommodating. I think that many such objects will be taken off sale altogether. For their owners, this is not the only home and not the only source of income, so in such situations the owners will prefer to postpone the sale until better times.

    There will definitely be a downward movement in commercial real estate, but for which properties it is too early to say. This is not as fast and mobile a market as residential real estate.

  • Let’s take a closer look at the two European countries that have been hit hardest (so far) by the coronavirus: Italy and Spain, which have the highest number of infections and the most stringent restrictions. What is the situation specifically in these two countries?

  • About Spain, I can say for sure that the majority of developers who are in the process of constructing residential complexes are constantly online with their clients, offering options for deferring regular payments. No one is interested in panic; everyone understands that they are in the “same boat” with their customers. Everyone is confident that after the quarantine ends, construction sites will continue to operate.

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    In Italy, the situation with new buildings is similar to that in Spain. Well, in the secondary market around the world, clients are trying to complete the execution of begun transactions (after all, the purchase and sale of real estate is a matter of more than one day, even for residents), where this is organizationally possible.

  • How are things now in Spain and Italy with the issuance and extension of residence permits and other documents?

  • In these countries, all government agencies that process immigration documents are closed. Every country is hastily passing laws on the extension of tourist visas and residence permits for the period of quarantine. The situation with each person is very individual, but the authorities of all countries are making efforts to ensure that delays in visas and residence permits do not later result in problems with immigration authorities.

  • The coronavirus situation clearly shows the importance of moving many areas of activity online. What methods do you see from the point of view of the foreign real estate market: are there opportunities for remote viewings, concluding transactions and completing documents online?

  • There is huge potential for digitalization in the real estate sector, but so far technical solutions have only been applied to domestic markets. The main problem is that the legislation on registration of real estate transactions is so different in each country that the prospect of creating some kind of common platform is still very far away. Cadastral registration authorities, notaries, and banks are involved in each transaction. The unification of all these institutions will require a long time and enormous efforts from all countries. However, just recently, transferring money from account to account required a trip to the bank, and now even pensioners are happy to use online banking platforms. The technical process is developing so quickly that perhaps in the near future we will see the first solutions in the field of real estate.

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    Photo source

  • If the issue of investing is already on the table, and the investor does not want to wait for the situation with the epidemic to be resolved, which countries do you recommend paying attention to?

  • There are not many countries in which it is possible to complete a purchase and sale transaction without the presence of the buyer. Even if this issue can be resolved with the help of a notarized power of attorney for a local representative, opening a bank account, especially in the current conditions, is extremely difficult. There are several countries where this is possible. This is Thailand, where you can purchase real estate from some developers without coming to the country, the Czech Republic, where you do not need to open an account to conduct a sales transaction. However, with significant amounts of investment, notaries may refuse to carry out a transaction without the physical presence of the participants.

    If a potential buyer already has an account and an idea of ​​​​in which area he wants to buy real estate, then a power of attorney, of course, can decide the issue of completing the transaction. But in any case, not at the moment – notary offices are also closed for quarantine.

    What you can definitely pay attention to at the present time is the acquisition of passports from various islands in the Caribbean region. You can acquire a second citizenship almost without leaving your home! Of course, collecting documents will require communication with some government agencies and banks, but here almost all the necessary certificates and statements can be made online.

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