The projects in the delivery or construction phase total 2,149 homes. The pre-sales portfolio is 1,640 homes
Start of a relevant number of home units delivered (1Q 2020 best quarter in deeds of the last years).
Sales coverage of 80% in developments with construction; progress > 75% (974 home units).
COVID-19: Relevant impact on the economy and on real estate. Work in Progress for impact appraisal and measures to take.
Quabit's good positioning against potential changes on the demand.
Competitive advantage thanks to internalization of construction activity.
In the first quarter of 2020 (1Q 2020) Grupo Quabit has launched 6 developments with a total of 339 units, which means that as at 31 March 2020 it has 61 developments in different stages of execution with a total of 4,320 homes and an estimated billing amount of EUR 970.4 million. The projects portfolio, its status and geographic distribution are detailed in section 1.4.1 of this Report.
The pre-sales (reservations and contracts) signed in the period reached 132 homes, representing a decrease of 31.3% compared to the same period in 2019. This reduction reflects the impact of the COVID 19 pandemic because of the closure of points of sale caused by the state of alarm.
The pre-sales portfolio as at 31 March 2020 (customers commitments through reservations and contracts) is 1,640 homes (an increase of 32.6% compared to 31 March 2019) for a total billing amount of EUR 334.5 million.
The revenues of the Construction activity amount to 9,584 euros in 1Q 2020. Third-party billing contribution to the Group's Consolidated Income Statement represents 22% of that amount.
INVESTMENTS. LAND PURCHASES
In the 1Q 2020, until the date of formulation of this interim management report, Grupo Quabit has added two lands into its portfolio with a buildable area of 7,071 square meters buildable (sqmb). These operations were committed through contracts signed in 2019 and correspond to ready to build plots located in the Corredor del Henares and the Costa del Sol.
COVID 19 IMPACT
At the date of formulation of this Interim Declaration, the most relevant elements derived from the pandemic caused by COVID 19 are the following:
Quabit has been monitoring the situation and designing action protocols adapted to the recommendations of the Ministry of Health and competent authorities in Spain, with the intention of working for the health and well-being of all and to try to minimize the effects of the crisis on the Group business.
The Group has taken commercial measures adapted to this situation, focusing its efforts on online marketing, implementing new tools such as the option of online pre-reservations or the video call service. Additionally, it has relied on a new system of electronic signature of documents with full legal validity to try to normalize the signing of contracts and deeds in this exceptional situation.
Measures have been taken aimed at adapting operating expenses to the new situation:
The members of the Board of Directors have agreed to a 20% reduction in their gross salary.
On May 7, a Temporary Employment Regulation File (ERTE) for productive causes because of the pandemic was made effective. This ERTE affects, approximately, 66% of the workforce of the promotion business. 38 people reduce their working time between 50% and 60% and 22 to 100%. The ERTE has an expected duration until 31 December 2020.
The Group is working on the evaluation of the impacts that this crisis may have on its financial statements. In a first stage of this analysis, as of 31 March 2020, it has recorded a provision for impairment of its land portfolio for an amount of 37.6 million euros. This provision affects its planned land portfolio as it is the land that requires more investment effort and a longer time horizon for completion, which makes its fair value more sensitive to the foreseeable decline in demand. The Group has made an internal estimation, considering the effect of this retraction of demand, on the key variables of the market valuation of said assets (required rate of return and completion period). Once the alarm state is over and there is greater visibility about the impacts on the promotion market, the Group will proceed to update its Business Plan.