SPAIN'S NEW NORMAL BEGINS: Life After the COVID-19 Lockdown

Mijas-Málaga, by Jose A.

On Sunday June 21, Spain will enter what the government is calling the “new normal.” After three months, the State of Alarm will come to an end, but it will not be a situation completely free of restrictions. Hygiene and safe-distancing measures will remain, e.g., the obligatory use of masks when a safe inter-personal distance of 1.5 meters cannot be maintained, with fines of up to €100 for violators.

Regarding many other matters, the Autonomous Regions will take control of much of the management of the crisis from now on, with each regional government establishing its own measures. For the most part, these will involve regulating capacity in establishments and events of all kinds, whether indoors or outdoors. Madrid, for example, has already announced that nightclubs will remain closed until July 5th. Local fiestas may also be suspended. 

Nationwide, the biggest change is an end to mobility restrictions within Spanish territory and the freedom to once again travel to other regions without need for justification. Travel restrictions with most European Union and Schengen area countries also come to an end on Sunday. The exceptions are: Portugal, whose border will not reopen until July 1st, and the United Kingdom, for which no date has been set for normalizing travel. The Spanish government is considering implementing a  quarantine requirement with the UK, given that people traveling there must self-isolate for two weeks. Meanwhile, the British government is considering revising this measure, but not before June 29.  

Borders with the rest of the world will begin to open on July 1st, on a gradual basis, but there will be some requirements before travel is allowed: an epidemiological situation that is similar to or better than that of EU member states; certain health conditions in the country of origin, the journey and the destination; and reciprocal acceptance of travelers from the EU.

Will there be another lockdown in Spain? If there are localized outbreaks of the coronavirus, specific lockdowns will be possible on an individual basis and in very specific areas, such as in a town or city. Of course, a national lockdown under another State of Alarm could occur, if the need arises.  As Health Minister Salvador Illa said recently, “If we have to use it again, of course, we will use it again.”

Source: El País

Spain to allow German tourists to travel to the Balearic Islands without quarantine: 47 flights already scheduled

Bienvenido de nuevo

The Spanish government made it official today: Germans will be the first tourists allowed to try out Spain's famous sun and sand resorts in what is being called the New Normal—or what I call, “Life after the Coronavirus lockdown but not quite after COVID-19.”

The details: When, where, and how

Next week's partial opening of the country's borders is partial in two ways: 1) only for tourists from Germany and 2) only for travel to the Balearic Islands. In addition, these visitors will be exempt from the 14-day quarantine other travelers to Spain must currently undergo.

Specifically, beginning next Monday, June 15, some 10,900 German travelers are expected to begin alighting on the shores of the islands of Mallorca, Ibiza, and Menorca. (Sorry Formentera fans.) There have been 47 flights scheduled thus far—38 to Palma, 8 to Ibiza and 1 to Menorca. The first two flights are planned for Monday, and will arrive in Palma from Frankfurt and Düsseldorf. The third is scheduled on Wednesday, from Düsseldorf to Ibiza. The premiere flight to Menorca is scheduled to run June 27 from Düsseldorf.

Empty beach in Peguera, Mallorca: Marco Verch

Despite all these plans, these flights are actually provisional, since the official government declaration includes this caveat: “Additionally, by resolution of the official responsible for the Ministry of Industry, Commerce and Tourism, and in accordance with the Monitoring Committee referred to in article 4, the annex may be expanded, modified, revised or updated.” (Emphasis mine.)

On arrival at the airports, passengers will have to complete health questionnaires and undergo screening by healthcare workers. Anyone with symptoms, e.g., a fever or cough, will be given a test. If the test is negative, they will have to agree to "telematic monitoring of their symptoms." A Monitoring Committee, made up of at least one representative from Spain's airports operator AENA, the Ministry of Health, the Secretary of State for Tourism, the Ministry of Foreign Affairs, the European Union and relevant bodies in the areas of health and tourism in the Balearic Islands, will meet every two days.

Tourists will also have to stay a minimum of five nights and provide details about where they will be staying.

Other Special Routes Being Considered

Ibizas's sidewalk cafe's await

Other autonomous regions in Spain may soon be allowed to do something similar. Yesterday, Minister of Health  Salvador Illa said that in the coming days he expected to announce comparable agreements with other regional governments. Indeed, negotiations with the Canary Islands are reportedly in advanced stages, although at least one sticking point remains regarding mandatory requirements, since the government of the Canary Islands wants PCR tests carried out on each tourist arriving on the islands, not only those with symptoms. With the autonomous region of Galicia set to leave the state of alarm this coming Monday, it could be another candidate to open an early travel corridor with an EU country—or countries.

These early travel bubbles are consistent with the government's official declaration, which stated, "It is recommended that pilot programs be launched through the establishment of safe tourist corridors, prior to the end of the state of alarm, in order to verify the operation of the model for lifting temporary controls on internal borders and the recovery of freedom of movement.”

What does Brussels say?

Brussels actually wants to move a bit faster on all this, having recently called for the European Union's internal borders to be reopened next Monday. Some states, like Italy, have opened their borders for all citizens of countries in the Schengen area. Others, like Austria, have only done so for some of their neighbors. And a third group, of which Spain is a part, has not yet lifted barricades for anyone—at least it will not have until this exception of the new Germany-Balearic Isles route comes to pass. The European Commission wants to end this inconsistency and do way with all internal border controls in order to allow free movement from June 15 on, as detailed in a report it presented Thursday.

Source: Contando Estrelas Flickr

It seems that the EU’s call to open internal borders next week has increased pressure on Spain to open up faster. According to El País, “EU Commissioner for Home Affairs, Ylva Johansson, insisted on the recommendation that internal borders must 'reopen as soon as possible.' But she added that the main thing is for everyone to open internal borders completely before opening the EU’s external ones to third-country travelers.”

Despite this, the Spanish government insists that its decisions will be made based on health criteria alone and that, regional exceptions aside, the plan remains waiting until July 1 before completely opening borders to the rest of Europe. In fact, Spain continues to prevent full mobility between its own regions. This situation is due to end by June 22, when the Spanish COVID-19 state of alarm expires.

Meanwhile, Brussels seems to have accepted the fact that the opening of borders within the EU will probably not be completed according to its dictates.

“We understand that reopening on Monday for countries that have not yet decided to do so could be complicated, and that some might take an extra week or two,” Johansson also said.

In other words, the New Normal will not arrive throughout the European Union until July—maybe.

Carlos

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Sources: “Los turistas alemanes vuelven a Baleares y sin cuarentena: ya hay 47 vuelos programados a partir del lunes,” Hugo Gutierrez, El País, 12 June 2020 and “EU’s call to open internal borders by June 15 increases pressure on Spain,” Álvaro Sánchez, El País English Edition, 11 June 2020.

No COVID-19 realted deaths reported in Spain

Today, the Health Ministry reported no coronavirus deaths in Spain the last 24 hours. That's the second day in a row! Yesterday, June 1st, was the first day no deaths were reported since the health crisis began. Below are links to articles in the English language version of Spain's El País newspaper.

Source: New York Times

June 1, 2020: No new coronavirus deaths in the last 24 hours, Health Ministry reports

June 2, 2020: Health Ministry reports no daily coronavirus deaths for second day running

More Romanians, Fewer Brits

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That's the title of an article I just read in the Spanish daily, ABC. Basically, it's a review of a Bank of Spain report called, "Foreign Investment in the Spanish Residential Market Between 2007 and 2019." Apparently, foreign buyers of homes and property in Spain rose from  4.2% in 2007 to 10.% in 2019. 

The report highlights that during this period there have also been changes in the habits of these investors, one of them being the decrease in buyers from the UK. It notes that Brexit and the devaluation of the pound contributed to the fact that between 2017 and 2019 the British sold more houses than they bought in Spain. During this period the percentage of foreign purchases by Britons fell by 6 points, and last year represented 8% of transactions by residents of Spain's fellow EU countries. The opposite happened with countries such as Romania and Italy, which increased their participation in the market to 12% and 8% respectively. At the same time, the total of such purchases made by foreigners from countries outside the European Union are also significant (27% in 2019). Among non-EU countries, Morocco and China stand out, with respective percentages of 14% and 6% of purchases by foreigners in 2019.

According to the report, there were other significant changes in property sales to foreigners. Between 2007 and 2010, they barely represented 3.3% of the market, but then grew strongly until reaching the historical maximum of 10.5% in 2014. That year the recovery of the sector began, which caused non-Spaniards to gradually reduce their involvement in the market. In 2019 they represented an average of 7.8% of operations. 

The analysis also reportedly shows that the housing stock held by resident foreigners increased steadily from 2007 on, and then accelerated after 2014. Thus, in 2019, net purchases by foreigners accounted for almost 0.2% of the housing stock, almost three times more than in 2013. 

The report also highlights the interest that these buyers have in Spain's coastal regions, especially the Balearic and Canary Islands. Nineteen percent of housing purchases in Santa Cruz de Tenerife were made by foreigners last year, followed by the Balearic Islands (16%), Alicante (15%) and Las Palmas de Gran Canaria (14%). 

Regarding prices, the report indicates that between 2014 and 2019 the prices foreigners paid was 4% higher than those of domestic buyers, although this percentage rises to 10% when considering purchases in cities such as Tenerife and Palma de Mallorca. 

ABC quoted the report as saying, “These differences are probably a reflection of the different investment profile in different provinces. In those on the Mediterranean coast and on the islands, foreign investors with high incomes, who demand higher quality homes located in better areas, surely have a higher significance."

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In recent years, there has been speculation that the presence of foreigners in certain areas of Spain has caused housing prices in those regions to be more expensive. This theory the Bank of Spain now  corroborates, at least in part.

From the report: "The high correlation between population growth and rising property prices suggests that the increase in the foreign resident population in certain provinces (especially island ones) contributed to increasing house prices through their effect on demand for real estate."

Meanwhile, realty website Idealista reports that Standard & Poors recently carried out an analysis of the consequences of the coronavirus COVID-19 crisis on Europe's housing market. Results indicate that house prices are falling by 3-3.5% in Spain, as well as in the UK, Ireland and Italy. 

That sounds better than the forecast of Bankinter, which predicts that prices will drop by 6% (which Idealista pointed out is in line with the estimates of the Swiss investment bank and financial services company, UBS) and a collapse in sales of up to 35%, after having already fallen 3.3% in 2019. That would bring the volume of operations in 2020 to around 326,000, which would be the lowest level since 2014—the year Spain finally began its recovery from the recession. (You may recall that the main cause of  Spain's 2008-2014 economic crisis was the residential real estate bubble, which saw prices rise 200% from 1996 to 2007.)

It will be interesting to see what changes the pandemic will bring to Spain in so many areas, including in terms of house prices, sales, and the number of foreigners who buy property here.

  Saludos,                                                                                                                                                   

Carlos                                                                                                                                                       

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