A variety of well-regarded Spanish property portals and websites are reporting unprecedented levels of enquiries for properties for sale in Spain.

Although these are still hard times for most people in Europe, it seems that the dream of owning a property in Spain is still as strong as ever. This desire has also been fuelled by a raft of discounted and distressed Spanish properties becoming available, offering prospective buyers some of the cheapest prices and best value Spanish properties since the bygone days before the last Spanish propertyboom.

As we have reported here several times, there is an increasing interest and demand for Spanish properties. This is probably due to a combination of several factors:

-    the beginning of a new year tends to give people fresh impetus to achieve their goals

-    many prospective buyers seem to have been keen to rid themselves of the spectre of 2009 and all its recessionary doom and gloom. The new year has given many people a little boost in the confidence stakes.

-    The recession seems to now be behind us. Although we are still living in tough financial times, the future looks a little brighter, and so those plans and dreams that were on hold for the last 18 months are now back on the agenda for a lot of people.

-    Sterling is rising against the euro, giving British buyers greater confidence to invest in the Spanish property market.

-    The mortgage market seems to be easing slightly.

-    Historically low property prices in Spain have convinced many that now is the time to invest, rather than waiting for the inevitable return to normality and subsequent price rises in the better areas.

Commenting after the release of NAEA’s predictions for the global property market in 2010, Rowson said:

“If you are thinking of purchasing a property, do so in the early part of 2010.”

Rowson’s comments follow recent findings by property portal Property Abroad that Spain was the most popular for investors in 2009.

Via: Propertyshowrooms.com

In something of a financial U-turn the Spanish property market seems to be somewhat more attractive to overseas investors who are thinking about putting cash into the mortgage market and Spanish property.

According to Mercers estate agents enquires from British people about money types of Spanish properties that are available have increased considerably over the last 12 months.

The company says that prices for apartments and villa’s across Spain have fallen considerably which is attracting British potential buyers to consider international mortgages on Spanish properties.

Many seem to be waiting for just the right moment to flex their buying muscles in order to grab a Spanish property at a much reduced price as Spain is lagging behind the rest of the EU in terms of recovering from the global financial problems.

www.spanishnews.es

Spain’s cash-strapped Socialist government is poised to emulate the UK and increase taxes on the rich, reversing its policy of tax cuts and prompting protests from the conservative opposition.

The impending U-turn - designed to plug the gaping budget deficit arising from the global economic crisis – was signalled this week by José Blanco, public works minister. “If we need to raise certain tax rates in order to guarantee social policies or public investment, then we’ll have to do it,” he said in a radio interview.

“I believe in helping those who most need it, and if in order to help the needy those who can most afford it have to tighten their belts in times of hardship, then we must say so clearly to the public.”

Spain has suffered one of the most drastic budgetary turnrounds in Europe as a result of collapsing government revenues and rising expenditure, moving from a 2007 surplus of 2.2 per cent of gross domestic product to a projected deficit of 10 per cent or more this year.

Spending has risen partly because the number of unemployed has reached more than 4m – at nearly 18 per cent of the workforce, the jobless rate is the highest in the EU – and partly because José Luis Rodríguez Zapatero, prime minister, has promoted higher spending and nationwide public works to stop unemployment rising even higher.

As late as June, ministers, who had previously presided over the abolition of Spain’s wealth tax, were denying the need for drastic tax rises, but duties on fuel and tobacco were raised that month. Business leaders are now predicting increases in other taxes, including value-added tax and possibly income tax. The UK government has decided to increase the top rate of personal income tax from 40 per cent to 50 per cent next year.

With the Spanish economy shrinking at an annual rate of more than 4 per cent, the government wants to avoid crushing any incipient recovery by raising taxes and discouraging consumption. But economists believe it has little choice because it will be difficult to curb spending.

“They are stuck with taxes,” says Dominic Bryant, senior European economist at BNP Paribas. “With a lot of rigidity on the spending side, taxes will bear more of the burden.”

Leftwing trade union federations welcomed Mr Blanco’s comments, but the conservative opposition Popular party – whose standing in opinion polls has risen during the crisis – criticised what it called the government’s threat to raise taxes on the rich. In reality, said the PP, any such measures would affect the middle class, since taxing only the wealthiest would raise barely any revenue.

Even a potential future PP government, however, would find it hard to rebalance the budget without resorting to more taxes now that the Spanish property bubble has collapsed.

Mariano Rajoy, PP leader, has called for “austerity” and said he would aim to reduce Spain’s budget deficit to 3 per cent of GDP – the same as the now widely ignored deficit limit set by the European Union.

Story from Financial Times

My star article this week is Realism Rules in Overseas Property. Although not specifically addressing the Spanish property market, it contains 10 pithy and basic questions to ask yourself when buying abroad - anywhere.

The most important one for me is No. 9 - “A property is a long-term commitment if you want to make money from it”.

If more people had actually payed attention to that piece of advice, we would have avoided the worst of the current economic crisis.
Speculation about increasing property prices actually drove the property bubble to bursting point.

Two articles deal with the consolidation going on in the banking sector in Spain. In Three Spanish Building Societies Merge, we learn that three Caixa’s (pronounced kay-sher) in Catalunya are pooling their resources because, individually, they are at risk from the high level of loans in default.

The reasoning is that, even though they’ll also be pooling their bad debts, they’ll also be pooling their reserves, creating enough of a combined financial buffer to hopefully make it through the worst of the economic crisis.

Source: Kyero.com

Arancha Ibarra considers herself one of the lucky victims of Spain’s housing collapse. After struggling to find a buyer for her renovated two- bedroom apartment in Madrid for two years, Ibarra found a tenant for 750 euros ($1,066) a month, becoming one of the 1.5 million second-home owners thrust onto the country’s rental market.

The number of properties for rent in Spain climbed 55 percent in the past two years to 3.3 million, the highest since the Ministry of Housing started collecting the data in 2004. Rents in cities, including Madrid and Barcelona, are falling for the first time in seven years with declines of as much as 8 percent, according to Madrid-based property research firm Idealista.com.

“Those who need to sell but can’t are being forced to lease,” said Fernando Encinar, co-founder and head of research at Idealista.com, Spain’s largest real estate Web site with 308,000 listings for rent and purchase. “We haven’t seen this number of properties for rent since the 1950s.”

Spain built about 29 percent of new homes in the European Union from 2001 to 2007, even as it represented just 9 percent of the population. The resulting glut of 1.5 million unsold houses and apartments sparked the end of a decade-long real estate and construction boom that accounted for about 20 percent of the country’s gross domestic product in 2007.

Sales Slump

The ensuing housing slump has tipped the economy into the worst recession in 60 years with the unemployment rate climbing to 19 percent, the highest in the EU. Home sales fell by more than a third in the 12 months through May, the latest government data show.

Rents in Madrid and Barcelona jumped 28 percent and 56 percent, respectively, in the five years to 2008, driven by a jump in house values. Home prices rose 120 percent from 1997 to 2007, pricing many Spaniards out of the market.

This year rents declined 4.2 percent to 12.3 euros a square meter in Madrid and 8 percent to 12.6 euros in Barcelona, Idealista reported.

Guillermo Bruzon, a researcher at the IESE business school in Madrid, said rentals will continue to fall in coming years. “Price deflation is fundamental to ensure that people have access to housing, whether it be rented or purchased,” he said during a telephone interview. Prices and rents as a proportion of incomes has become “unsustainable,” he said.

One Offer

After two years of trying to sell her 70 square meter (753 square foot) air-conditioned apartment in Madrid, Ibarra rented it after receiving just one offer of 162,273 euros, 33 percent below her asking price.

“The rent barely covers the mortgage, but doesn’t pay the council tax and maintenance,” she said during an interview in Madrid. “It was the best price I could get and I can’t afford to sell at a loss or leave it empty.”

Owners of vacant homes also have to pay a yearly tax that’s equal to 1 percent to 2 percent of the property’s value.

Spaniards aren’t the only ones saddled with empty homes. The nation’s banks lent about 318 billion euros to domestic real estate companies and also were forced to accept billions of euros of real estate assets in exchange for canceling debt with insolvent developers, according to Fernando Rodriguez de Acuna, president of R.R. de Acuna & Asociados, a Madrid-based industry research company founded in 1980.

‘Sterile’ Assets

“Those assets are sterile, or constantly falling in value, so the banks have to get them off of their books or else they will damage their balance sheets in coming years,” Acuna said.

Banco Santander SA, Spain’s biggest bank, together with its consumer unit Banco Espanol de Credito SA, has 4.1 billion euros of property assets after taking real estate from failing developers.

Santander put 1,800 homes up for sale in January and sold 500 of them as of May, a company spokesman said. He declined to provide a breakdown of the bank’s residential and commercial real estate assets.

Banco Bilbao Vizcaya Argentaria SA, the Spanish lender that bought 490 million euros of real estate in the first quarter, forecasts that will climb to 1 billion euros by the end of the year. Caja Madrid, the country’s second largest savings bank, has about 600 homes for rent and is offering as many as 1,500 for sale at discounts of as much as 40 percent.

Prolonged Recession

Acuna estimates the slump in the Spanish residential property market will last seven years, prolonging the recession until 2013.

“Recovery is going to depend on when people can purchase homes again, which in turn depends on employment,” Acuna said during an interview at his office in Madrid.

Acuna estimates the economy will contract by 4 percent in 2009 and 2010, by 2 percent in 2011, and 1 percent in 2012. Growth will be zero or minimal in 2013, he said.

The Spanish government has forecast that the economy will shrink by 3.6 percent this year and 0.3 percent in 2010, and then grow 1.8 percent and 2.7 percent in 2011 and 2012.

Joblessness in Spain may reach 20.5 percent by the end of 2010, according to estimates from the European Commission.

“Redundancy is having a huge impact on home sales, hence many people are turning to renting,” said Ben May, an economist at Capital Economics Ltd. in London. “Even people who still have jobs are clearly going to be worried and those that are in a position to buy are waiting for prices to fall.”

Sliding Prices

The International Monetary Fund expects Spanish property prices to drop 30 percent from their peak in 2006. They’ve already declined 7 percent, analysts at Citigroup Inc. estimate.

Irene Garcia is among about 2 million Spaniards who have joined the ranks of the unemployed in the past year. The 33- year-old ex-production assistant gets 700 euros a month in unemployment benefits and pays 400 euros a month to rent a room in a shared apartment. The good news is her rent is about to drop 50 percent.

Garcia, a native of Galicia who moved to Madrid three years ago, found a room in an apartment in the city center. It was empty for six months, prompting the owner to cut the rent to 200 euros per month.

“I’m getting the same living space in the same area and saving 50 percent,” Garcia said. “I don’t know when the crisis will end or how long I will be unemployed, but this gives me a lifeline of six months.”

Ibarra knows she’ll have to wait much longer than that for the market to recover and to be able to sell her home.

“It’s crystal clear that in its current state the market is going to take at least five years before we see things pick up again,” she said.

zionistgoldreport.wordpress.com

In the meantime, there are countless cheap properties in Spain to be had, thanks in part to a surfeit of new properties as a result of oversupply. It’s a buyer’s market right now, and people are slowly returning to Spain as confidence is gradually restored. Do your research, and Spanish property can still be a good investment – as long as you’re in it for the long-haul.

It is relatively easy to find Spanish properties below £150,000. But first, that old chestnut – location. Get this right, and you’re on to a good start. Mark Stucklin, head of Spanish Property Insight.com (a property information website), advises: “In this market the strategy is clear: focus on established, desirable areas, then look for a good deal within that area. Everyone knows the location rule, but it’s the first thing that’s forgotten.”

Go for popular coastal locations with good rental or investment potential, such as the Balearics, the Costas, Marbella or Valencia. There are many locations inland that offer good value for money too, although you may need to look harder for somewhere with good amenities and ensure it’s not too isolated. “Look for quality of build and amenities, appealing surroundings that people can relate to,” adds Stucklin. Cities such as Barcelona and Madrid will always be popular, but property tends to be more expensive and appealing only to a niche market.

The type of property that’s offering the best deals is newly built, ‘key-ready’ accommodation, partly because there is so much of it just waiting to be sold. Paul McMullen, sales manager at Escape To Spain, explains: “There are some really good deals out there at the moment. The best I’ve seen are on new, key-ready homes. In many cases, the builders need to sell them in order to pay off the banks, so they are willing to accept up to 40 per cent less than the asking price just so they can close the sales office and move on to their next project.”

Victor Sagué, sales and marketing director at Taylor Woodrow de España, adds: “We have significantly reduced our prices on a selection of properties in line with the current market, with some homes now priced at just over £100,000. This has opened up the property market to those who may have previously thought they couldn’t afford to buy property in Spain.”

Julia Marriott and her husband, from Coventry, recently bought a townhouse through Taylor Woodrow at the Lagunas del Sol development in Riojales, Costa Blanca. Properties here were initially priced from £105,465. Julia explains: “We decided to move to Spain permanently to semi-retire. For us, the proximity to the UK was really important as we travel back to visit family. We looked all along the coast until we found Lagunas del Sol, and it just ticked all the right boxes for us. It’s close to the shops and beach, and our property overlooks the pool, which is great.”

Asked if she had any concerns about buying in Spanish property, Julia says they did, but they carried out their research carefully, choosing a good developer and location. “A good Spanish lawyer is essential!” she adds.

Lagunas del Sol is now sold out, but over in the Balearics, Taylor Woodrow is offering two-bedroom apartments at El Puerto II, Cala d’Or, Mallorca. Close to the beach and the town of Palma, the properties are set around a marina and are priced from £144,522.

If you’d prefer to buy inland, Key Ready Investments is marketing two-bedroom apartments near the historic city of Granada, Andalusia, for £83,638. Balcones de Iznalloz is a 90-minute drive from Malaga airport, and is also close to the Sierra Nevada ski resort. The complex features a large swimming pool, restaurant, gym and spa, and each apartment comes with a garage and storage room.

So, unlike the heady days of the boom, is off-plan now seen as too risky? McMullen says: “I wouldn’t advise anybody to buy anything totally off-plan at the moment – there’s just no point. Prices aren’t going up, so there’s no advantage – plus you always face the possibility that the developer might go bankrupt in the meantime, leaving you with a half-finished property and a legal headache in trying to recover your money. In the current climate buy something almost complete or key-ready.”

One example of a scheme that’s almost complete is being offered by Casas de Lorca. The Lorca Apartments, located very close the new Lorca University in Murcia, are due for completion in early 2009. The one-, two- and three-bedroom apartments are ideal for students and come with a guaranteed rental for three years. Prices start at £65,521 for a one-bedroom dwelling, and from £123,483 for three bedrooms.

If new-build’s not your bag, there are some good deals on resale (second-hand) properties, too. But be prepared to do some extra homework. McMullen explains: “Buying resales can be a little more difficult as you will find huge variations in price as some owners are more desperate to sell than others – so you can find identical properties within the same area for vastly different asking prices. The best advice is ask your agent what the same property would’ve sold for two years ago; if they are an established agent they will have this information, and then you can gauge whether it’s a good price or not.”

DLR Properties has on its books a resale two-bedroom Costa Blanca property, south of Alicante. Priced at £113,528, the property features an office annex and roof solarium. It is perfect for golf lovers, being situated between three golf courses – Villamartin, Campoamor and Las Ramblas – and is within walking distance of restaurants, bars and shops.

For something a little more romantic, Poets Cottage is a restored three-bedroom village house, on the market with Andalucia Exclusive for £142,842. Situated in the village of Arriate, near Ronda, the property retains many original features, including a well and a wood-burning stove. It has mountain views, a large terrace, and a garden with mature olive trees.

If your budget is really tight, Titan Properties is offering a two-bedroom terraced villa on the Costa Calida for an unbelievable £54,621. Located on the Camposol resort in Mazarron, Murcia, the property is within easy walking distance of an 18-hole golf course, clubhouse and four-star Spa hotel. It has never been occupied, and comes fully furnished with a suntrap roof terrace.

Or, if you fancy a restoration project, a large ruin is available in Almeria, with agent Casas de Lorca. The ruin comes with 30,000 square metres of land, with water and electricity, and offers the potential for four bedrooms. It is located in the peaceful countryside of Huercal Overa near Lorca, and is a short drive from villages, towns, beaches and a motorway. It is priced at £82,799.

Clearly, there are plenty of bargains on the market; provided you approach with care and research, and seek good legal advice, property in Spain can still offer a sound investment.

Taylor Woodrow’s Sagué agrees: “Unlike the newer emerging markets Spain is established and Brits have been buying property there for years, so providing you do your research you’ll have a good idea of what you’re getting in terms of product and location. If you look at Spain as a long term investment it will take some beating.”

This week, the IMF is counselling prudence and continued financial vigilance because it, unlike the Spanish PM, believes that the global economy is a long way from recovery.

Meanwhile, Mr Zapatero simply has to promote the notion that the worst of the credit crisis in Spain is over - because the government cannot commit to any further stimulus spending. Spain launched one of Europe’s biggest economic stimulus plans, and if that hasn’t already done the trick, there’s no more where that came from. Worse, Spain borrowed the money to fund these incentives, and that money will need to be repaid by the taxpayer in the form of increased taxation. Unfortunately, charging people more tax tends to also suppress economic growth.

For what it’s worth, I agree with most economic commentators who say that Spain will be one of the last European economies to recover. Taking that into account, and the improved buying power of Sterling, I believe that we will see a fresh wave of Brits with a renewed interest in Spanish property over the next couple of years.

While a weaker Euro certainly helps make Spanish property more affordable, don’t get too carried away just yet. There’s always time for you to make a considered and informed decision.
Recently, I read an article in the OPP about a company intending to invest €200M in distressed or non-performing real estate.

Although not speaking specifically about Spain, the company’s founder commented: “.. some local markets offer tremendous potential for opportunistic real-estate investing in a bottom-cycle timing within a medium-term investment time frame.” Huh? “bottom-cycle timing within a medium-term investment time frame.” All was made clear a little later: “These assets .. can be acquired cheaply, with a three to four-year holding period and targeted returns of more than 20%.”

Are you wondering if now is the right time for such an investment strategy in Spanish property? I would say, probably not. The simple reason is that it costs around 10% of the value of a property to acquire it, and another 10% to sell it in Spain - and that’s before taking 18% CGT in to account. To net a 20% profit on a property investment in Spain over four years, property values would need to increase by 10% each year - turning a €200,000 property into €290,000 four years later.

While that’s not impossible, it is extremely unlikely given that, right now, nobody is brave or foolish enough to predict that kind of growth in any European property market. No, your reasons for buying property in Spain need to be more about a lifestyle choice than a pure investment play - something I was reminded of when reviewing a new book by Nick Snelling.

Source: Martin Dell, Kyero.com

Spanish property owners are restructuring debt with their creditors throughout Europe as the recession hammers the cash flows and values of commercial property.

But in Spain, the downward spiral of the real estate market is so severe and Spanish property crisis is so evident that some property owners are being forced to return to the workout table with lenders just a few months after they reach restructuring agreements.

Reyal Urbis SA, a residential and commercial developer that is Spain’s second-largest real-estate company by market value, is in talks with creditors to refinance debt because of worsening market conditions just eight months after banks agreed to restructure more than €3 billion ($4.1 billion) of its debt.
Also, local property developer Afirma Grupo Inmobiliario is seeking refinancing for more than €1.44 billion in debt, as its core business dried up because of the global liquidity crunch. In an earlier deal in summer 2008, Afirma was able to postpone the first payment of the principal of a syndicated loan of €667 million and allowed to break some initial covenants.

These double-dipping efforts are putting new pressure on banks, which weren’t wild about having to restructure the first time and now are even more reluctant to sign deals that could increase their exposure to a sector with deteriorating assets. But other options for lenders are challenging, analysts say. If property owners aren’t able to restructure and are forced to file for creditor protection, then banks may be required to set aside more capital to cover potential losses. Although turbulence from the global financial crisis hit Spain later than other European Union countries, the intensity of its economic correction is now more dramatic.

Some experts point to signs of an incipient economic recovery that could support real-estate demand. Lower interest rates in the 16 countries that share the euro also are boosting critical liquidity. But others say that even if developers succeed at fresh refinancings, their problems may not be over.
At the same time, the magnitude of woe in the real-estate bust is staggering. Spain is among the worst performers of the euro zone in terms of unemployment, fiscal imbalances and a huge stock of empty residences across the country.

Spain’s government expects the country’s economy to contract 3.6% this year, the worst rate in more than 39 years. Spain’s unemployment rate jumped to 18.1% April, the highest in the euro zone, which reported an average jobless rate of 9.2% in the same month. More than half of the jobs lost in the EU in the first three months of the year came from Spain.

Spanish real estate prices tripled in the past decade, a time when liquidity was abundant and interest rates plummeted following Spain’s adoption of the euro. At its peak, Spain built 800,000 residences annually, more than Germany, Italy and France together, according to data from Spain’s central bank. But house sales are now plummeting, dropping 48% in April.

In just one year, Spanish property market has gone through a dramatic shake-up. Two major companies, Metrovacesa SA and Inmobiliaria Colonial SA, are now in hands of creditors. Another one, Martinsa-Fadesa SA, is under creditor protection. Others are seeking new refinancing to survive.
Reyal Urbis, which primarily builds residences, is suffering from the leveraged buyout of rival Urbis in 2007. It has €4.9 billion in debt after selling €1.5 billion in assets to financial-services companies.

Banesto, a unit of banking giant Banco Santander SA and previous owner of Urbis, bought €1.1 billion in real-estate assets last year from their borrowers as many of them were on the brink of default. Reyal Urbis has been a big borrower from Banesto and is widely believed to be among the companies that sold Banesto troubled assets. Reyal officials told EFE Dow Jones that the company is in negotiations with creditors and seeking to adapt business plans to the current market environment but declined to say whether it sold assets to Banesto. A Banesto spokesman declined to comment.

Meanwhile, Afirma Grupo Inmobiliario officials said Afirma has reached agreements with more than 75% of its creditors but declined to disclose further details.
Problems facing Spanish property owners in these second rounds of restructuring talks include the quality of their collateral. In the first round of talks, owners were able to pledge additional collateral in exchange for concessions from lenders on financing terms. But in the second round, owners often lack fresh collateral, says Mikel Echavarren, head of local consultancy Irea. If there is additional collateral, it is often of inferior quality, such as land and houses under construction, rather than residences ready for sale, he said.

“The value of some land could be now close to zero, depending on licensing and zoning,” said Juan Ignacio Sanz, professor at Madrid’s Esade business school.

Source: wsj.com

The number of new residential mortgages granted in Spain in April fell 42% year on year to 50,288, according to latest figures from National Institute of Statistics (INE). As elsewhere, Spanish property market runs on mortgage lending, so this dramatic fall in new lending speaks volumes about the weak state of the market. These figures suggest the market is still deteriorating under the pressure of the credit crunch, with no end in sight. March was 25.5% down, so the figure for April represents a serious deterioration on some already bad months.

On a month to month basis the picture is no better. New lending fell 4.1% between March and April, and year to date, new mortgages are down 37.6% compared to same period last year.

To make matter worse, the average value of new residential mortgages is also down 18.4% to 115,442 Euros. Fewer, smaller mortgages means that the overall value of new mortgage lending is down 52.6% year on year, and 7% month on month. Mortgage credit has now fallen for 22 consecutive months.

Mortgage interest rates

The average mortgage interest rate agreed in April was 4.7%, a percentage fall of 8.2% in a year, and 7.7% in a month, thanks to falling Euribor base rates. However, whilst Euribor has fallen 63% in a year, from 4.82% in April 2008 to 1,771% now, mortgage interest rates have barely fallen at all. The difference is the result of lenders using higher margins to increase their profitability and rebuild their balance sheets.

Spain’s savings banks, known as cajas, lent for an average of 22 years with a rate of 4.82%, whilst banks lent for 20 years at 4.66%. 95.7% of new mortgages in Spain are still variable rate.

Source: Spanish Property News