I haven´t got a clue what the figures show (in any event we normally have to wait about 2 years to find out!), but from anecdotal evidence alone, I am convinced that the Costa del Sol property market is showing signs of recovery. Like most areas of the world, here in Marbella we saw a painful 2nd half to 2008 as the credit crunch gripped the markets in a vice and buyers were reluctant to invest. The last 6 months have seen several rounds of aggressive price-cutting by property vendors, and sales prices are now down to pre-boom levels in some places. This represents great value for those buyers who believe in the long-term future of the Costa del Sol , and are willing to invest based on its fundamental selling points – access, lifestyle and climate. From talking to several people within the Costa del Sol property industry, most were reporting increased levels of activity and sales during the first 2 months of 2009, with the European market particularly buoyant – there were many instances of sales involving Danish, Belgian, Italian and home-grown Spanish buyers. Of course, everyone is on the lookout for a bargain, but with the big agents now no longer operating on the Costa del Sol , this increased level of interest has allowed some of the smaller real estate businesses to actually view the current market as something of an opportunity. I stand by what I previously said – if sterling recovers against the euro, and the Brits re-emerge as the predominant buyers of Costa del Sol property , we will then be faced with a very active market. Is that the time when vendors will seek to redress the balance with regards to prices? Related Posts The Sales have started in Spain - it´s OFFICIAL Buying a Bargain Property in Spain – Don´t Forget the Basics! Good News or Bad News? - The Media Decides

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Property Sales Picking Up On The Costa del Sol

Official data reveals that Spanish public finances accumulated a deficit equivalent to 3.8% of GDP in 2008. Spanish public finances lurched into deficit in 2008 to 3.8 percent of output and breaching the EU limit, official data showed, as the government spent heavily to stimulate the economy through the global crisis. The data from the finance ministry showed a deficit sharply beyond the European Union ceiling of 3.0 percent of gross domestic product, and marking a big reversal from a surplus of 2.23 percent of output in 2007. The EU’s Stability and Growth Pact limits public deficits of eurozone countries to 3.0 percent of output. Eurozone governments are expected to achieve a public surplus in times of growth. The public budget figure comprises the budgets of central government, welfare services and local authorities. The government had already forecast that the deficit would exceed the limit in 2008 and 2009 because of government measures to shore up financial markets and boost the sluggish economy. Formerly one of the eurozone’s chief engines of economic growth and job creation, Spain had moved its accounts into surplus but suffered an abrupt change of fortunes in 2008 when the global financial crisis hastened a correction that was already underway in its key real estate sector. The Spanish economy, the fourth biggest in the eurozone, officially entered recession in the last quarter of 2008, when once-booming activity shrank by 1.0 percent, the second quarter running of contraction. Last week, the European Commission took the first move to tackle swelling budget deficits in six EU states, including Spain. But the EU executive arm said it would use the “full flexibility” available to consider the six cases of deficit overrun due to the “exceptional circumstances” engendered by the US-born crisis that has hit bank lending and consumer spending, putting jobs and businesses at risk. In January, the credit rating agency Standard and Poor’s downgraded the long-term rating for debt issued by Spain. Story from Expatica

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2008 Spanish Deficit 3.8% of GDP

Those of you who are already familiar with Puerto Banus will probably already know of the frontline Italian restaurant, Picasso. Serving a variety of pizzas, pasta dishes, salads and meat, this restaurant has been a thriving presence in Puerto Banus for several years. Here we are in February, traditionally the quietest time for Costa del Sol tourism, and if you took a stroll around Puerto Banus at the weekend, you would have seen most restaurants struggling to attract diners through their doors – in fact, I noticed a few that were absolutely empty. However, as soon as you get to Picasso, the first thing that you notice is the queue to get in, and the fact that the place seems to be buzzing with people. A well-informed source once told me the number of covers that Picasso managed during the course of a single day during the summer months, and the figure was startling. Indeed, if you were to walk past Picasso right now, I guarantee it would be busy! So why is this one restaurant seemingly so successful whilst neighbouring businesses are going to the wall? I can say one thing – the food isn´t anything special. I dined there once to see what the fuss was about, and thought I heard a chorus of microwaves pinging in the kitchen. Indeed, my plate of pasta looked like it needed waking from the dead! I´m not saying it´s in need of a visit from Gordon Ramsay, but I guess Picassso must trade on something else to attract these hordes of people. For sure, the location is fantastic – right at the front of the marina, and next to several designer boutiques. It´s family-friendly and offers sensible pricing in an area that traditionally does things to excess. Yet, I´m still amazed at its continued success. I think the biggest factor is a very clever front-of-house policy. There always seems to be a queue, and the restaurant always looks packed. Yet on closer inspection, you will see that most of the occupied tables are located to the front of the dining area. Like most of us, when you see a busy restaurant (and particularly a 10 minute queue to get in), something compels you to give it a go. After all, if it´s that busy, it must be good! Perosnally, I´m not so sure, but why not give it a go yourself next time you are on holiday in Puerto Banus ? Related Posts A Busy October for the Costa del Sol Joining a gym - is there any point? Bond Street on The Sea!

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Puerto Banus – one restaurant is constantly busy!

The Spanish property market shrank by 29% in 2008 reveal the latest figures from Spain’s Property Register, released in a report yesterday. There were a total of 561,500 home sales last year, compared to 788,500 the year before. Sales of new properties fell 13% to 296,400, and resales fell 41% to 265,000. On a quarterly basis, there were 113,300 home sales in the last 3 months of the year, down 8% on the previous quarter, with new build sales down 3% to 64,500 and resales down 13% to 48,800. Extremadura was the only autonomous region where home sales increased, by 0.6%, thanks to an increase of 91% in new sales, and despite a decrease of 20% in resales. Year on year, sales fell the most in Catalonia (-44%, new build – 37%, resale -49%), The Balearics (-39.5%, new -27%, resale -50.5%), and The Valencian Community (-32.5%, new -14, resale -44%). The report points out that province on the coast are suffering the biggest declines in sales, thanks to the collapse of the second home market. Sales fell in Tarragona / Costa Dorada (-50.5%), Gerona / Costa Brava (-43%), Barcelona / Maresme (-43.5%), The Balearics (-39.5%), Alicante (-37%), and Tenerife (-36.5%). The report also points out that new build sales were higher than resale for the third consecutive period, whereas resales are normally higher. As the report explains, this is because many people who bought under construction or off-plan in previous periods are now having to complete or lose their deposits. Were it not for this, the number of new properties bought would be much lower. “In the following quarters we can expect the results for newly built properties to get closer to those for resales,” says the report, which means new build sales will start falling by 40% or more. The average mortgage value fell 6% last year to 136,148 Euros. Average mortgage terms fell to 307 months (25yrs, 7 months), down 8 months on the previous quarter, and 29 months compared to 2007, when the average mortgage term was 28 years. 98% of new mortgages in Q4 were variable rate. The average monthly mortgage repayment was 830 Euros in the last quarter, the equivalent of 47.7% of gross average income. Story by Mark Stucklin

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2008 Spanish Property Sales Down by 29%

I´ve just been watching a feature on GMTV saying that the number of British visitors to Spain was down by 20% in January, compared to the same month last year. Hardly surprising really, is it? Since January 2008, the world has changed for all of us, and a lot of those cheap trips to Spain for us Brits have been shelved whilst we try to balance the books and survive the credit crunch and the recession in general. Additionally, chose ´cheap´ trips that I mentioned are not so cheap anymore, and this is undoubtedly a major contributing factor to the downturn in British tourist numbers. It´s surely no coincidence that sterling has lost around 15% of its value against the euro in the last 12 months. There´s an almost direct correlation between the falling pound and the falling number of British tourists to Spain. Well-known Marbella businessman and local celebrity, Maurice Boland, was interviewed by GMTV, and he stressed that while the sun was still shining, people would still flock to the popular destinations such as the Costa del Sol and the Costa Blanca . Boland expects British tourist traffic to increase over Easter and into the summer months, as more Spanish holidays are booked last-minute. I´m not entirely convinced. Although many holidaymakers are indeed leaving it late to book their summer vacations, mainly to see how sterling fares against the euro, I think a large proportion have already arranged to venture further afield, outside of the eurozone, to places such as Turkey and Egypt. However, I firmly believe that once sterling recovers a little of its lost ground against the euro, you will see the Brits returning to the costas – fundamentally, it´s still the favourite holiday destination in Europe. The Brits´ love affair with Spain may be on rocky ground, but it looks set to continue. Related Posts Are the Brits really leaving Spain? – PART 2 The Weak Pound – How to Benefit When Buying Your Spanish Property The Weak Pound – Tips for UK Buyers of Spanish Property – Part 1

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20% Fewer Brits Coming to Spain

The fall in Spanish home sales accelerated in the final quarter of 2008, a report showed on Tuesday, reflecting a collapsing property sector that has helped tip the fourth-largest euro zone economy into recession. Some 113,274 homes were bought and sold in the fourth quarter, down 13.5 percent from 130,884 in the third, Spain’s College of Registrars said. The drop was sharper than a 8.6 percent fall between the second and third quarters. For the year, 561,420 sales were registered, down 28.8 percent from 2007. The average value of Spanish mortgages declined for a fourth consecutive quarter, falling 1.84 percent year on year to 136,148 euros ($174,400), the college said. Average mortgage values fell 6 percent in 2008, it said. Figures from Spain’s National Statistics Institute published last month showed mortgage lending fell 23 percent in November compared to a year earlier, reflecting both weaker demand and tighter bank lending. Most analysts say Spanish house prices will fall by up to 30 percent from their highs, though some see greater declines as possible as the end of a decade-long residential construction boom coincides with credit market turmoil. Story from Reuters

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Spanish Property Sales Down 13.5% Q4 2008

With the number of cruise ships visiting its port up by more than 20% in the last 3 years, Malaga is officially the fastest growing cruise port in the Mediterranean. In 2009, 350 ships with an estimated 450,000 passengers are due to call in at Malaga , the gateway to Andalucia and the Costa del Sol . Related Posts Aer Lingus launches new Malaga – Gatwick route Easyjet Winter Schedule – not so easy anymore? Winter Arrives on the Costa del Sol

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Malaga Cruises Booming

Find out how much a typical town house in Almuñecar will really be worth in 2010 You want to buy a property in Spain, but are put off by the fact that you have no idea what price you should pay - especially in today’s market. You know that prices are falling, but how low will they go, and when will they rise again? In the UK, you would use the freely available Land Registry data as a basis for determining the value of a property, but nothing like that is available in Spain. Should you make an offer based on advertised or asking price? No , the Kyero Spanish House Price Index demonstrates that even though real-world house prices fell in 2008, vendors have not reduced their asking prices. Should you use the Spanish Ministry of Housing data for price per square metre to calculate a fair price? Again, no , the Ministry’s data is based on mortgage valuations - and is unreliable from a number of perspectives. Should you use the price per square metre quoted by the largest national property portals, Idealista and Fotocasa? Again and again, no and no , their figures are based on the advertised price and the vendors assessment of the size of their property. These sources of information are of little use individually, but when combined with three more nuggets of information from the vendor, and Tinsa’s index of property prices in Spain, you can build up a realistic price profile for a property - and use it to negotiate a great deal. Here’s how. Let’s say you want to purchase a three bed, two bath town house with a pool in Almuñecar - how much should you pay? A Kyero search reveals a whole range of properties & prices, from €189,000 to €480,000 . The Kyero price index for 3-bed Almuñecar properties in Q4 2008 is €348,000 . The Ministry of Housing data shows a price per square metre of €1,482 / m 2 in Granada province, and €1,691 / m 2 in Motril (the nearest town they publish data for). An Idealista search reveals properties priced between €210,000 and €400,000 - averaging €2,459 / m 2 . A Fotocasa search reveals properties priced between €42,000 and €1,400,000 - averaging €2,300 / m 2 . From these five sources of data, we can only conclude that the average property price will be anywhere from €42,000 to €480,000 , and anywhere from €1,482 to €2,459 per square metre . Not exactly precise numbers, but we’re zeroing in. Now, you need three pieces of information from the vendor of the property: The floor area, and the last purchase price and date . The floor area recorded in the title deeds will almost certainly be inaccurate. Have the vendor measure up accurately and give you a blow by blow inventory of the house dimensions. More information about how to measure a Spanish property . Next, the vendor needs to show you the escritura (title deeds) which will detail how much they paid for the property and when. There’s a good chance that the figure recorded in the escritura is not the price they actually paid for the house - just the part that they decided to declare. If there’s a substantial difference between what is recorded and what they claim they paid for it, look for other hard evidence like a mortgage valuation document. If the vendor is unwilling or unable to provide you with these details, or if you get the feeling that the numbers they are providing are not credible - walk away . In this market, the vendor must shoulder the burden of proving what they paid for the property. Now you know the actual floor area, use the high and low figures from Idealista, Fotocasa and the Ministry of Housing to calculate a nominal price. If the house has 200m 2 , at between €1,482 to €2,459 per square metre, we arrive at a property price of between €296,000 and €491,000 . Still too big a gap to make a useful offer - but again, this tallies with the Kyero figures and confirms you’re in the right area. Now, take the price the vendor paid for the property and have a look at this graph from the latest Tinsa price index . Why is this data reliable? Let’s say that you’re comfortable that the vendors paid €200,000 for the property in 2003 . The Tinsa index for coastal property in January 2003 stood at 1303, while in January 2009, it stood at 2216. This means that over the last 6 years, property prices have increased by 70% ((2216-1303)/1303)*100 . Applying this to the €200,000 paid for the property in 2003, Tinsa’s index says that it’s now worth 70% more, or €340,000 . But wait, there’s more. Tinsa’s index shows that property prices are decreasing, and they forecast a further 20% decrease by the end of 2009. In effect, Tinsa predicts that their index will stand at 1773 in January 2010 - meaning that this property should sell for around €272,000 at that time . Naturally, there will be some price variation due to location and condition of the property, and whether the vendors have extended or fitted a new kitchen, etc. But these separate sources of information allow you to work with hard data, rather than guesswork. My advice? Find a property you’re interested in, find a vendor who will work with you, do the maths, share your data with the vendor and try to arrive at a consensus on the value of the property. Not every vendor will be willing to do this. That’s fine - just walk away . When you’re happy with the vendor, and the numbers, find a compromise between the prices for 2009 and 2010 derived from the Tinsa data. In this example, you’ll be negotiating a price between €272,000 and €340,000 - still a broad range, but at least it’s based on data from Tinsa, and corroborated by four other sources: Kyero, Idealista, Fotocasa and the Ministry of Housing. More importantly, it means you can negotiate based on the price the property will be in 2010 - without having to wait. Martin Dell, Kyero.com

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What Will You Pay for a Spanish Property in 2010?

This month, a petition will be delivered to Number 10, suggesting that Gordon Brown picks up the phone and talks personally with Spanish Prime Minister José Luis Rodríguez Zapatero about Spanish real estate and the UK investor. The document demands he lodge a complaint on behalf of thousands of British citizens who describe themselves as victims of Spanish property ‘scandals and abuses’. Not only that, it calls on Brown to support a second angle of attack - a request for EU involvement: sanctions, no less. Is the UK love affair with Spanish property ending in recrimination, hurt feelings and the divorce courts? The petition highlights a more worrying problem and suggests systemized corruption involving developers, agents, lawyers, even town hall officials, and a Spanish legal system seemingly disinterested in making things right. In Spain, planning decisions relating to urban land are made by the local town hall. Regional government makes decisions pertaining to ‘rustic’ land. According to dissatisfied British investors, local mayors have been giving the nod to rustic developments; issuing building licenses without the legal authority. Huge areas have been developed illegally, and properties sold off-plan. Regional authorities are now intervening, in some cases demanding that properties – some sold, to British investors – aren’t connected to utilities, or in some cases are bulldozed. Spanish lawyers, meanwhile, are said to have been failing to gain necessary Bank Guarantees… an essential piece of paperwork, according to a 1968 law, designed to hold off-plan purchase deposits in separate bank accounts and force their return (plus interest) if the developments aren’t finished in the agreed time. According to the organizers, three-quarters of the petitioners have paid deposits on properties now deemed illegal. Almost a quarter have completed on illegal developments. The website’s a compendium of woe… including stories of buyers being whisked by agents in their own cars for meetings with carefully selected lawyers. None of it sounds good. But for now, the race is on, will investors get any kind of legal redress before the developers go into administration? Story from Citywire

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New Build Spanish Property Under Fire

At last, we have access to a set of numbers about the Spanish property market which are worth taking seriously. Regular readers will know that the Spanish Ministry of Housing figures are laughable - not just because they still show property values increasing - but because their average house prices are calculated using mortgage valuations. Last year, the National Institute of Statistics stepped-in with their own house price index - only to find that their figures also showed property prices in Spain increasing. Their figures are based on the actual notarised values of property transactions - which are heavily skewed by the amount of cash that changes hands ‘under the table’. Even our own Spanish House Price Index , based on advertised property prices, continues to show property prices holding steady as vendors and their agents refuse to advertise at a substantial discount. Tinsa, a leading company of property assessors have been compiling their Spanish property market index since 2001 - and making a summary of it publicly available since the middle of 2008. Wait though, if the Ministry’s figures - based on valuations - are so wildly irrelevant, what makes Tinsa’s figures - also based on valuations - any better? The short answer, as noted by Edward Hugh at Spain Economy Watch , is that the Tinsa trends reflect our first-hand experience of reality very closely. Tinsa’s reports are not focused on the actual price of a particular property - but on the overall trend in house prices. Whatever their methodology is, it seems to be working. You can download the latest report from the Tinsa web site . Ignore the horrible mix of Spanish & English on the site - there’s great data here. First off, this graph shows that their index of property prices increased steadily until the end of 2007 - precisely in accordance with our real-world experience. Since then, their index has dipped with their January 2009 index similar in value to that of January 2006. The second graph shows the percentage of change in the index, year-on-year. We can see that between 2002 and the middle of 2006, their index of property prices increased by around 15% annually. Again, this is consistent with what actually happened in the market. In the middle of 2006, the increase in property prices slowed down, so that by the end of 2007, property prices were increasing by less than 5% Y-O-Y. At the end of 2008, property prices fell by 10% overall. These figures are the most sane representation of reality I have seen - from any source. Now, as Edward Hughes notes, all we need to do is keep an eye on this second graph to see when it starts to level out and, hopefully, kick back up again. If you want to know when the bottom of the Spanish property market is approaching, watch out for these monthly reports from Tinsa. Martin Dell, Kyero.com

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Finally, Realistic Spanish Property Trends