Vasili Grossman wrote a masterpiece of literature recommended for those who are not afraid - in these fateful weeks- to deepen the despair and infamy of war and ideological fanaticism. The author never saw his masterpiece published, Life and destiny, because the savage Soviet regime censured him and ostracized him until his death. Before that, had been a hero acclaimed by the dictatorship thanks to his chronicles of the siege of Stalingrad (something that saved him from execution). He was also the first to tell us the horror of a German concentration camp. (Treblinka).
It comes to mind talking about World War II because the fiscal stimuli announced by the United States to counter the effect of the crisis will generate a deficit of 20% de su PIB. Fact Americans haven't seen since 1945. In Spain we had not suffered such a health drama since the times of the Great European War who took advantage of our neutrality to baptize that deadly flu as Spanish. The above are, by the way, the only possible analogies with a time of war, despite the obsession of many for the use these days of war allegories, so inappropriate and corny at the same time.
Central banks preceded the stimulus measures announced by all developed countries, expanding their balance sheet to buy assets much more aggressively than in the previous crisis.. The ECB has already announced that it will buy the excess deficit caused by the crisis and there are proposals so that it can monetize debt by circumventing the restrictions on buying in the primary market. (for example, buying private banks interest-free perpetual debt issued by the states). And Europe, this time, the will is not to impose austerity as a recipe to get out of the crisis.
Thus, we face the following panorama: drastic drop in production, caída enorme de la recaudación de impuestos, aumento gigantesco del gasto público para atender el incremento del paro mientras se atienden el resto de partidas del estado del bienestar, medidas de estímulo fiscal agresivas para compensar la caída de producción que aumentarán más el déficit, y medidas de política monetaria de represión financiera para controlar el coste de toda esa deuda y nutrir de liquidez al sistema bancario, avoiding the contagion of the crisis.
Although it seems the opposite, the previously described is good news. The damage that an austerity policy - to the Greek is unimaginable- would provoke right now, even more so in a continent already severely punished for its lack of economic dynamism after the previous crisis. But the free liquidity bar is presented with conditions that will be a challenge for the coming years, once we have overcome this precipice that we are looking at today. Aggravated because no government, alone or in coalition, has implemented fiscal consolidation measures since 2014 when we were growing up to 3%.
Regarding the real estate sector, accepting that the scenario has changed and that it has been very deteriorated, the new approach to managing this crisis is positive.
In the current environment it made a lot of sense to approach the hotel sector, the most punished by quarantine, and know the approach of a manager like Javier Illán, president of Millenium Hotels, whose strategy is to buy buildings that can be transformed into quality hotels. Not just rehabilitating existing hotels, but facing the complicated bureaucratic labyrinth of changing the urban use to light a new hotel asset.
This activity, in addition to rejuvenating and improving the urban park of the cities, faces risks such as deviations in cost or execution time. So, for the risks assumed, These strategies aim to obtain higher profitability than the more conservative wealth management.. And Javier Illán has known how to invest successfully, offering good returns to those who have supported you from the beginning. Always with a collective investment approach that has naturally resulted in the constitution in 2017 of the partner Millennium Hotels, currently supported by more than 450 accionistas y que cotiza en el MAB desde el año pasado.
In the talk that I could have with Javier, He told me that he has the same vision today as when he started buying hotels in 2009, 2010 and 2011: "I do not invest today for next month, but in the medium and long term ". Besides, argues that buying in times of crisis in good locations is like when a farmer sows his crop, "The next day the result of what you have sown does not come out, but it has a process; in real estate it's exactly the same ”.
How this crisis is being so hard with the hotel sector, also opportunities will appear for new capital, with the necessary entrepreneurial profile, can continue to improve the quality of the Spanish hotel park. Because if the socimi regime offers anything, it is, precisely, that the saver can benefit from strategies that require a large volume of investment that was previously only suitable for large assets. Now the universe of Spanish real estate investment is expanded, which are no longer limited only to investment in apartments for rent.
Source: Idealista.- 07/05/20.
