It remains in a state of suspended animation.
By Nick Corbishley for WOLF STREET:
On March 5, 2020, a venerable Mexican lady flew from Mexico City to Madrid, and then on to Barcelona where her only daughter — my wife — lives. At that time, nobody knew it was the height of the first wave of the covid-19 pandemic in Europe. Sylvia, my mother-in-law, had just sold her apartment in Mexico City with a view to renting a flat near ours in Barcelona. The plan was simple: she would spend the first month or so with us in our 85 square meter apartment (915 square feet), adjusting to her new surroundings before beginning to look for her own place. Three hundred and sixty five days later, she’s still here.
This completely unplanned-for eventuality happened for a variety of reasons. The first was that the Mexican peso, with immaculate timing, shortly after she had sold her apartment and deposited the pesos in the bank, plunged by 25% against the euro in the five-week period from February 20 through March 24, thereby wiping out a quarter of her purchasing power in Spain. The peso has recovered only a small portion of that plunge since then.
The second reason was the two-and-a-half month lockdown that kicked in across Spanish territory ten days after my mother-in-law’s arrival. It was one of the strictest lockdowns on the planet. People could not go out for a walk without a justifiable reason, and being outside with someone else was out of the question.
The three of us were stuck indoors together for 70 days. Once Spain began to reopen, in mid-May, we realized that the still-raging pandemic had effectively torpedoed my mother-in-law’s plan to rent a three-bedroom flat and sublet one of the rooms to short-term visitors from Mexico.
Nonetheless, my mother-in-law’s arrival was in many ways a godsend. My wife had been furloughed at the start of the lockdown and remains so to this day. I lost almost half of my clients in the space of three days and have only just begun to replace them with new ones. By pooling our resources we’ve been able to weather the storm financially. Our savings remain more or less intact, primed for another rainy day. Plus, if my mother-in-law hadn’t come, my wife and I — two expats/immigrants living thousands of miles from home — would have had to spend the worst crisis of our lives completely cut off from our family.
Aside from the occasional family dispute and despite the dystopian backdrop, we’ve managed to coexist in relative peace and harmony, unimaginable as that may seem. But my mother-in-law is a fiercely independent, modern-thinking woman who has spent most of the last 40 years living alone. She knows how to entertain herself. She’s happiest debating questions of philosophy, politics, and culture and is one of the most artful devil’s advocates I’ve ever encountered. And she hates cooking (but loves eating).
Outside the apartment, things moves more slowly and more erratically than before.
The Spanish economy remains in a state of suspended animation. Almost a million people are still furloughed. Everyone is waiting for the tourists to return while many of us dread the full impact of the 11% contraction in GDP last year — the biggest since the Spanish Civil War.
The tourists are not coming. In January just 434,000 people visited the country, down 89% year on year, while domestic tourism has been effectively outlawed: inter-regional travel has been banned in Spain since Christmas and is likely to stay that way until at least Easter.
The Spanish government just approved an €11 billion stimulus plan for the tourism and retail industries. It’s a fraction of the €72 billion in revenues that the tourism industry alone lost last year. The visible signs of economic stress are growing.
The number of people officially unemployed reached a four-year high of 4.08 million in February — the equivalent of 16.2% of the working population. That’s a million less than at the peak during the last year of the last recession (2013), when the unemployment rate hit an eye watering 26%. But remember: almost a million people are currently furloughed and don’t count as “unemployed.”
It’s particularly bleak for Spain’s youth, who already bore the brunt of the last crisis. The official jobless rate for those under 25 is 40%. As The Economist notes, “the financial crisis of 2007-08 took an especially heavy toll on Spaniards. Macroeconomic indicators suggest that the covid-19 pandemic is hitting Spain, which is reliant on tourism, even harder.”
The most visible manifestation of the current crisis is the growing number of boarded-up shops, bars, restaurants and other street-level businesses. They can even be seen on some of the toniest streets such as Passeig de Gracia.
By October, 14,000 of Barcelona’s 80,000 street-level properties were vacant, according to the Census of Commercial Establishments of Catalonia. In June last year, I reported that Spain’s biggest property website, Idealista, was advertising 244 retail properties in the prime tourist areas of El Born, Sant Pere and Santa Caterina. The number has now risen to 286 retail properties. The properties range from tiny little shops on tucked-away alleyways to sprawling bars, restaurants and stores on some of the barrio’s busiest thoroughfares.
The problem is not just the surging number of vacant properties; it’s that few people would want to fill them in the current climate of almost total economic uncertainty, even as retail rents plunge. Every now and then a valiant business owner opens a new store in one of the vacant premises, a rare but welcome sight.
One possible solution being considered is to refit some of the street-level properties into ground-floor apartments. In a few neighborhoods such as Horta-Guinardó this had already begun to happen before the virus crisis, albeit on a small scale.
Residential rents are also falling, both in Barcelona and Madrid, but they are still too expensive for my mother-in-law, who has Mexican pesos, that have plunged against the euro, in her bank account.
Her rental property, an apartment in the Mexican city of Puebla, became vacant in January after the tenants moved out, and a vital source of income has now vanished. So she may fly back to Mexico, still keeping her options open, but she will probably move into her now vacant Puebla apartment in the next month or so. If so, we will miss her. But nothing is written in stone when it comes to my mother-in-law. And if we’ve learned anything from the last year, it is that anything can happen in 365 days. By Nick Corbishley, for WOLF STREET.
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