Lockdown forces Spain’s real estate market to modernise
Spain’s lockdown is dragging one of Europe’s older-fashioned real estate markets into the 21st century, with estate agents scrambling to offer virtual visits and notaries lobbying to legalise e-signatures to offset a near-total halt of business, Reuters reported on Wednesday.
In the latest episode of Spain’s real estate rollercoaster -which saw the sector boom and bust in 2007, sparking a deep recession – 99 percent of transactions have stopped during the battle against the coronavirus, Spain’s Notary Commission told Reuters.
“We’re definitely going down the virtual route,” said Shirley Rhodes, commercial director at Lucas Fox, a Barcelona-based agency with a 17.5 million-euro ($19 million) turnover in 2019.
“We’re teaching our brokers how to angle the camera,” said Rhodes. “It will be very professional: a GoPro, lighting, one person talking and the other recording.”
Spain’s real estate sector accounted for 10.5 percent of gross domestic product in 2019 and is a big draw for foreigners, who accounted for nearly one in five buyers in 2018, according to the General Council of Notaries.
Tom Maidment, a partner at Lucas Fox, hopes the crisis has a “purging” effect. “It’s an old, antiquated industry that needs shaking up anyway,” he said of the sector that still often relies on multiple people in a room together for a signing.
Before coronavirus hit, his company only provided video tours for about 10 percent of properties, when a client was unable to visit in person. Now they offer virtual viewing for most listed properties.
However, no estate agent is an island: their business relies on mortgage-providers, notaries and lawyers, all of whose operating ability is on hold.
Under quarantine, notaries have only practised in emergency cases, when halting transactions caused patrimonial or financial loss.
One family in the northern region of Cantabria had sold their old home, but not yet signed their new one’s purchase when the country shut down.
Stuck in administrative limbo, the whole family was staying with relatives – until local notary Jose Corral intervened on April 21, over a month into lockdown. Corral deemed the family’s situation pressing enough to certify their acquisition.
“You can’t leave a family on the street because they’ve not been able to sign the deed,” Corral said, adding most people opted to delay signing.
SIGNING WITH GLOVES
The few transactions he has certified were all conducted with gloves and social distancing measures – but Corral, also spokesman for Spain’s Notary Commission, said his profession was rushing to establish new processes.
“We’re developing a system allowing people to sign electronically, and waiting for the justice ministry’s authorisation,” Corral explained. “We could use this electronic method even after the crisis.”
A spokeswoman said the ministry will evaluate the notaries’ proposal “thoroughly”.
“Commercially speaking, other countries use technology much more,” said Oscar Martinez, president of Spain’s Association of Professional Real Estate Experts. “We love physical contact. Clients prefer meeting in person to email or phone calls.”
Institutional investors such as France’s Amundi agree: real estate transactions require more physical presence in Spain than in other European countries, a spokeswoman said.
Spanish regulation also stifles innovation, according to Diego Bestard, CEO and founder of Urbanitae, a fintech platform allowing lightweight investors to invest in real estate projects through crowdfunding.
Spain’s legislation “has definitely hindered the appearance of new players,” said Bestard, whose startup waited two years before receiving regulatory approval.
“It makes more sense to go to the UK, or Germany. We were burning cash without being able to sell our product.”
The Digital Affairs department in Spain’s Economy Ministry did not respond to requests for comment.
Even with the ongoing changes, selling a house is likely to remain a largely physical process. Currently, if mortgages are involved, up to a dozen people can be in the room for the signing, when buyers give sellers a physical cheque as brokers, bankers, agents, lawyers and notaries look on.
“Not everything can be done through power of attorney,” lamented Lucas Fox’s Maidment. “It’s still very manual.” ($1 = 0.9212 euros)
