1. FACT – true prices paid for houses have fallen 50% or more in most areas of the country and NOT the 30% shown in the registrar’s statistics.
2. CAUSE – Traditionally the full price paid for a property was not shown in the official sales document, with as much as 30% being in cash ‘under the table’. Thus the register shows low values. However, stronger disciplining of money laundering, etc, has meant that the registered prices are probably now only 10% down on the real total money exchanged.
3. RESULT – So registered prices should appear to be rising by 20%. However, as prices have in fact fallen 50+%, the registered prices show an incorrect statistic of -30%. Continue reading →
“In the last five years there has been virtually no value for land,” said Rafael Powley, a Madrid-based director of strategic consulting at JLL. “There are no buyers and if you want to sell it right now, there is no price for it.”
Investing in land or half-built developments means spending money to start, demolish or complete schemes without any guarantee of selling them or finding tenants. Investors are reluctant to do this due to the Spanish recession and excessive supplies of property built up during the boom years.
“The money you need to spend upfront takes you backwards,” said Justin O’Connor, chief executive of property fund manager Cordea Savills, which has about 7 billion euros of assets under management in Europe. Continue reading →
Regarding property in Spain, it has recently been announced that the Spanish banks are being forced to put all their property on the market at realistic prices to get their liquidity in order.
This is perhaps the start of the good news. At last we can see an end to the downward spiral, though it’s some time away and we are not at the foot yet. Everyone has known, but it’s never been formally acknowledged, that the Spanish banks have not valued the property to actual market level. Now they will be forced to do so, either by sale of the property or by having such a quantity of property marketed and sold at low prices that higher valuations cannot be maintained. If they had honestly declared the collapse of assets as it was, in the same way as those banks in Ireland and the UK, then the short-term loss of face would have been substantial, but the long drawn out damage that is currently being felt might not have occurred. Continue reading →
February’s monthly lunch of the award-winning Marbella Business Institute (MBI) took the form of a discussion on the future of local property and its values.
The intention was to benefit from the experience and knowledge of members of MBI. As it has been in existence for more than 30 years, its investor and entrepreneur business members have seen the Costa del Sol survive through at least three recessions and their subsequent booms. Continue reading →