Dear friends,
In the midst of this stage of forced confinement, all of us who make up the DE SALAS team want to send you that anticipated hug, which we cannot yet give each other.
This letter also serves to share some of the changes that, in the opinion of experts, the immediate future will probably bring us and which, due to its interesting content, we attach below. (Future forecasts by Roberto Sholtes, from UBS).
We also want to thank you for the trust you have given us to manage your real estate operations. From our homes we actively follow the market and diligently respond to all telephone and email inquiries.
We are at your disposal, as always, although now it is in a remote mode, but technology allows us to be very close.
We also want to thank the calls and testimonies of affection received from so many people who, in the face of this new situation, have expressed their gratitude for our work over all these years, for having facilitated the purchase of their wonderful homes, where spending confinement is almost a privilege.
This test will pass and we will return to daily activity with more enthusiasm and desire.
Until then, a big hug,
THE ENTIRE ROOM EQUIPMENT
THE FUTURE FORECASTS of ROBERTO SHOLTES OF UBS
- Savings rate will increase
- The recovery of consumption and investment will slow down.
- Fiscal policies will be more expansive.
- Spending on health and social protection will increase.
- Universal Basic Income will be applied in some countries.
- The tax pressure will increase and will be even more progressive and redistributive.
If everything goes as experts expect, this spring the COVID-19 epidemic will have been contained and a new economic and financial cycle will begin.
In many ways there will be a before and after. But after the not-so-distant experience of the Great Financial Crisis, it is advisable to be very skeptical that politicians' priorities will change or there will be great advances in global governance.
What does seem evident is that there will be many other persistent changes in the global economy, in fiscal and monetary policies, in living, working and consumption habits, and in the use of technological advances. This is a preliminary compendium of that new world.
In the economic order, the paralysis of factories to contain the epidemic or due to lack of supplies, just after the trade dispute between the United States and China, will accelerate industrial deglobalization. Many companies have seen that they are vulnerable with such extended manufacturing and logistics chains and will relocate parts of their production. And they will take advantage to automate and robotize them, to also reduce dependence on a workforce that can be confined to their homes.
Companies - and their employees - have forcibly adopted teleworking. The experience will make many rethink whether the size, skills and location of their workforce are adequate, which will also have consequences for the real estate market.
Another hard lesson for many households and small businesses is the need to have greater reserves to face interruptions in income. The savings rate will increase, which will slow down the recovery of consumption and investment.
Fiscal policies will be more expansive. Spending on health and social protection will increase. Universal Basic Income will be applied in some countries. The tax pressure will increase and will be even more progressive and redistributive. Banking and public guarantees for the most vulnerable people and companies will gain prominence.
Monetary policy will rescue the Welfare State. Rates perpetually close to 0% and Quantitative Easing sine die will effectively finance budget deficits and end up making public debt in the developed world, although immense and permanent, ever cheaper.
Confinement has been the best conceivable advertising for e-commerce and digital banking, social networks, content and entertainment platforms, telematic education and even tele-medicine. In case there was any doubt, fiber and 4G-5G networks and cloud storage have proven critical infrastructure and great competitive advantages. The Internet of Things is the great imminent revolution. The big question, with enormous implications for the economy and the real estate market, is whether consumption, leisure and entertainment habits will irreversibly change. Are many businesses, bars, restaurants, theaters and concert halls at risk?
It is in the crisis when changes accelerate and businesses are more capable of differentiating themselves. There will be big winners and big losers. The recovery of bonds, stocks and real estate will be very uneven. The advantage for investors is that, through thematic funds, we can see how the world changes sitting on a diversified exposure to those trends that are now trading at such attractive prices.
Weekly – Regional View Spain This report has been prepared by UBS Europe SE.
