The CEO of Real Estate at the French group believes that the real estate sector “might suffer the least” in the current economic situation.
Author: Roberto L. Vargas

Source: La Razón

Borja Ortega, CEO of BNP Paribas Real Estate Spain, is confident that, unlike in 2008, the real estate sector will weather the current economic turbulence better than other sectors. In an interview with LA RAZÓN, he notes that “there was a halt and production stopped. No new homes were started, land wasn’t purchased, and land transformation plans weren’t initiated,” he states. However, he believes the situation is different now. From his privileged position, Ortega explains that although there are supply issues, there has been no halt in activity, and inflation, which has been much discussed, is actually a good ally for the sector. “Historically, high inflation has benefited [the real estate sector]. Value corrections that might come with rising interest rates, which could lower value, when viewed in the medium to long term, always benefit real estate because they counteract the decline in value. In the end, your rents increase due to inflation, and asset values appreciate,” he assures.

Ortega, like other real estate experts, believes that now is a good time to invest in real estate assets in Spain, a country that he claims has strong legal security. “If a year ago the average yield on housing was 3.5%, it will likely rise by a few points, meaning it will continue to provide more profitability than any other product,” he says.

The attractiveness of the market is evidenced, in his opinion, by the fact that real estate now represents a significant portion of institutional investors’ portfolios. “Twenty years ago, it was 3% of the total investment portfolio, and now it’s 15-20% of the total portfolio for some investors,” he asserts.

Small Investors

However, Ortega does not believe that real estate investment is attractive only to large corporations. He argues that small investors also have a place in the market, and under increasingly favorable and secure conditions. He notes that in recent years, “companies dedicated specifically to managing rentals for small investors have appeared, ensuring rent collection, and conducting tenant scoring… that didn’t exist before. And that makes life much easier for investors,” he explains.

While Ortega strongly supports real estate as a good investment, he is cautious about predicting price trends. He says demand remains active and there is a need for product. “As long as greater supply is encouraged, there will be price stabilization. What needs to be offered is greater access to more products.” He adds that this requires promoting public-private partnerships. “What we should do, because investors demand it, is to foster public-private collaborations, which would help increase the housing stock and facilitate access to housing, which is a right for the population. Where it has been done, it has worked, and institutional investors appreciate that option. For example, in the Basque Country, public-private collaboration has always worked very well and attracts both large and small investors,” he details.