In these last months, traditional rental has gained strength to the detriment of tourism rental which has been badly affected by the coronavirus crisis. This is one of the conclusions to be drawn from the analysis of the real estate market during these last three and a half months of health crisis. As we will shortly see, not every part of Spain has responded in the same way, as there are significant differences between one region and another. However, there is one common denominator which is the distress that tourism rental is going through during this crisis and furthermore, it is probably the most affected and harmed real estate product. Some weeks ago, in this blog, we wrote an article about the future of tourist lodgings. In that article, we pointed out that tourist lodgings did not offer a clear picture because the coronavirus crisis has cut short all kinds of tourism, and this has had a direct impact on this real estate product which is mostly oriented towards foreign public. Now that we have more facts and figures we can see that residential rental has greatly benefitted from this drop of tourism rental. Consequently, a shift from one business to another has taken place, a fact which appears logical. The owners who cannot rent their property to tourists, seek a solution in traditional renting, as was to be expected. Let us take a close look at this.

MADRID AND CATALONIA, AT THE HEAD OF THE TRANSFER

It is estimated that 16% of tourism rental that took place in Spain before March, has turned into traditional renting. It is, undoubtedly, one of the main consequences caused by the COVID-19 regarding our real estate market. However, if we take a look at our two main cities, the difference is much greater. In Madrid and Barcelona the transfer from tourism rental to traditional renting accounts for around 40% since the state of alarm was announced in Spain, meaning the collapse of tourist lodgings in both cities. We must take into account that it is precisely the two autonomous communities of Madrid and Barcelona that have the largest number of tourism rental. In addition, some real estate portals allocated, until recently, 20% of the housing stock of these two communities to tourism rental. Now that tourism has disappeared and that this niche market is dead, the gap is being occupied by traditional rental. Nonetheless, in Spain there are other regions which are regarded as holiday areas, especially those located on the coastline. Here, the number of tourist lodgings has not decreased so much as they are exclusively focused on the holiday period. In addition, the state of alarm was lifted at the beginning of this summer.

SO LONG OR FAREWELL?

But what will happen with the investors that have abandoned the idea of tourist lodgings? Experts believe that a large number of them will never go back to tourism rental, whereas others will try to reintegrate into this business when circumstances improve. The problem is that, at present, it is impossible to know when these circumstances will take place and in consequence, it makes it impossible to lay down a phase back to plans for those who have abandoned the business. Nevertheless, if the owner has opted for recycling in traditional rental with a view to return to the business of tourist lodgings when the situation improves, then he/she must take into account that the rental contract is valid for five years. Hence, this does not allow to put the plan into effect in the short term.