Spanish Property Market Facts
This web-site has been set-up in response to the market shifts in the Spanish property market.
The directors of the company have worked in the European real estate market for many years and like most agents gained their experience in the Spanish property market which positions this new company to take advantage (on behalf of our large client base of investors) this new shift in the property business.
The market in Spain can realistically be described as depressed as has well been documented in the U.K. press. While we all understand the U.K. press can be often be described as sensationalist, in this instance there is enough evidence to support these claims.
The real problems started some 18 Months to 2 years ago predominately within the re-sale market with falling prices being driven by the German ex-pat population. The German Tax authorities became very aggressive towards German citizens ownership abroad and as such the Germans dumped huge numbers of property on the open market in a bid to pre-empt the impending law changes.
As the Germans had been among the first to purchase in Spain 20-30 years ago they were in a position to sell at well below the current valuations, and this caused wide-spread valuation drops in general.
The second factor to highlight is the off-plan market. In the last 7-10 years there has been a huge building programme throughout Spain seeing figures as high as 25-40% of all Europe's building being concentrated in Spain with a high proportion centred on the "Costa's". In particular regions such as Costa Del Sol saw huge amounts of buildings being sold as "Off Plan" which essentially is a method of funding by Spanish developers using investors money, rather than Banks finance.
The aggressive sales driven by large real estate companies encouraged investors to buy multiple properties off-plan so as they could sell some of their units "Before Completion" to a third party and take that profit to pay for the remaining units. This foolish buying strategy severely overheated the market and caused a near collapse of this market in these areas. The unfortunate result has been that there has been a ripple effect to other areas and this has caused a run on the market which has further exasperated the situation.
The results of this problem are only now coming to light with more and more developers going into liquidation; the highest profile company to date has been the Llanera group however this year will see many more to follow.
The more recent factors acting against the Spanish Property market are of course the downtrend in the U.K. market with the shockwaves of the U.S. sub-prime mortgage market and the well known victims of the crisis such as Northern Rock seeing the bank of England along with the British parliaments inept handling of the whole affair further exasperating this problem.
The latest factor to hit the Spanish market is the strength of the Euro. It is only a matter of months ago that the rate from Sterling to Euro was hovering around the 1.50 mark, now we see rates as low as 1.33. In essence a U.K. Investor is reluctant to put Sterling into Euros right now and lose such big margins so "when in doubt stay out"; and this trend can only continue.
The Spanish government has announced that they project that 30% of all real-estate companies will cease to exist by the close of 2008, and so with predictions such as this our company has moved rapidly into the emerging re-possession/Bankrupt stock market. We are currently building a portfolio of distressed sales with a marketing strategy being developed as we speak to accommodate what we anticipate as an avalanche of such sales being dumped on the market.
Our office is located in Moraira on the North Costa Blanca which is one of the most sought after coast lines with UK, German, Dutch as well as the wealthy Spanish from Madrid and Barcelona. In our town alone this year 2008, 2 major agents have closed, one being a long established developer in their own right having traded for over 35 Years.