Given that this question has often arisen in recent discussions with our partners and customers, we thought we would share some ideas about the evolution of this sector in the near future.
We believe that despite the first signals, real estate projects will continue to remain an attractive asset especially for the big players in the market, because they end up representing and giving a sense of security in the near future for any developer and ultimately for future tenants and buyers.
Unfortunately, this year, the development of projects as well as the construction and sales of real estate have experienced a slowdown, even reaching, in some cases, a stoppage of activity in the large construction sites. The importance of an analysis regarding the sector has become apparent against the background of the global crisis triggered by the COVID-19 pandemic and the effects caused by the unique times the world is facing today. Thus, the ownership of real estate is still seen as an important asset in the investment portfolio of serious business groups. This also has been proven by the trends seen in China, where after the re-launch of activity following the first wave of the epidemic, there was a slight increase in sales compared to the pre-pandemic average. It remains to be seen whether this growth is a singular signal or whether it will be repeated in other international markets as restrictions are being lifted in other countries.
However, like any similar period, we believe that it raises a good premise for strengthening the market position, especially for real estate developers. If the promises of European banks are fulfilled and interest rates for the real estate sector are lowered, along with stagnant or even declining prices for land with potential for development, then we may have a combination that presents an attractive offer and has high chances of re-launching, at least temporarily, the momentum of constructions not only in Europe, but also in our country. When the liquidity crisis erupted, there was a new wave of consolidation and an increase in the number of new releases from established developers. This is likely to continue during the crisis, and as time progresses, we have been able to see a number of developers joining groups with larger brands.
That being said, it is clear that for the housing sector it is very possible that the uncertainty of the current situation may dampen the buyer's confidence. Thereby, the decision to buy a house or a new apartment will probably be postponed due to this feeling and due to the trends that are still constantly changing the market. Even after the crisis of 2008, there was a new wave of consolidation during the slowdown in sales and a subsequent increase in the number of new projects and launches from established developers.
Therefore, in this period of time we have to wait and observe what will happen in the coming months both in the Romanian and European market as well as in the worldwide market, to see if we`re dealing with a trend or just a sole a moment. In general, any investment during this period is guided by emotions, being ultimately influenced by the general level of confidence in the economy and its evolution.
