Spain tries to hide under the smokescreen of an International conspiracy, TINSA is revealed as not-quite-so independent after all, and two pieces of good news for Spanish finances. In a bizarre twist this week, Spain hit out at English-language news agencies conspiring to bring down the Euro and the Spanish economy. As the writer of The Zapping of Zapatero in the Economist answered: “To this piffle the best retort is: grow up”. Mr Zapatero, however, continues to insist that Spanish economic recovery is near - something that economists outside the country have a hard time agreeing with because the Spanish government haven’t fleshed out their recovery plans. However, two pieces of good news for the Spanish economy broke this week - shoring up international confidence in the country. First, Spain enjoyed a strong bond issue - raising €5 Billion. A bond is basically an IOU from the Spanish government and, the fact that it sold out quickly is a very practical demonstration of how confident the world’s financial markets are of Spain’s ability to repay that debt. Second, the International Monetary Fund stated that Spain is not Greece . A spokesman said: “Spain has robust economic statistics and institutions with a solid history and credibility”. It seems that despite the constant news and rumour-mongering, investors are more than willing to continue investing in Spain - all conspiracy theories aside. Moving on from the world of Spanish politics and finances, please check out Nick Snelling’s new article: What the Spanish Coastal Law Really Means . If you are thinking of buying a Spanish property anywhere near the sea, it’s important to be ware of this fuzzy piece of legislation. Last week, I sang the praises of property valuations company, TINSA. Chartered surveyor, Campbell Ferguson was kind enough to email me this quote from Fuster Associates, a legal firm in Murcia: The biggest valuation companies, such as Tinsa and Tasamadrid, are connected with savings banks and the banking industry; “hence, every time they value a home at less than its former value, their own assets depreciate”. To put it another way, “to admit that homes have come down in price is tantamount to admitting that the assets which back up loans have fallen.” Hmm, so maybe my assertion that one of TINSA’s advantages is that they’re independent is suspect - that’s certainly true in the opinion of this Spanish commentator who said: “You trust the valuations of a company funded by more than 30 savings banks? Bad analysis.” I admit that the independence of TINSA may be questionable - but I do stand by the fact that their index trend is the only data series which tallies closely with what we have observed in practice. Moving on .. We started a new Kyero blog last week to let you know what we’re up to behind the scenes here. Some of the posts are quite technical, some aimed at estate agents, others at the general public. Some talk about functionality we’re developing, and others about problems we’re trying to fix. I hope you find the posts interesting and decide to comment and have your say if you feel strongly enough about a particular subject. Martin Dell, Kyero.com

Continued here: 
No Spanish Conspiracy Theory Required

Spain was the last major European economy still in recession in the fourth quarter, final data showed on Wednesday. But the markets gave some cheer to the Socialist government, as signs arose that fears surrounding sovereign debt in the euro zone may be easing for now. The National Statistics Institute reported that the Spanish economy shrank by 0.1 percent in the fourth quarter from the previous quarter, in line with a flash estimate made last week and better than the 0.3 percent decline in the quarter before. It was the seventh straight quarter of contraction for Spain, meaning the country has been in recession almost two years. Joblessness has neared 19 percent in the country following the disappearance of the easy credit that fueled a Spanish property boom during the previous decade. Prime Minister Jose Luis Rodriguez Zapatero called for the opposition to back its austerity measures to rein in spending and help reassure the markets. But he also celebrated the solid results from a government bond issue Wednesday as showing the market panic over Spain’s accounts had been unjustified. “Spain’s solvency as a country is unquestionable,” he said. Spain drew a stampede of demand for the issue — €12 billion of orders for a €5 billion syndicated 15-year bond, according to IFR, a Thomson Reuters service. The pricing was at the low end of the initial guidance. Neighboring, debt-ridden Portugal, seen by markets as the next domino to fall if Greece were to have payments problems, saw its borrowing costs fall. It sold €1 billion of 12-month treasury bills at a lower average yield of 1.173 percent in another well-bid auction. Analysts had said a successful Spanish sale could open the door for Greece to offer a planned 10-year bond. European Union leaders pledged support last week for Athens’ plans to shrink its huge budget deficit but stopped short of financial aid. “Good news in the euro zone periphery is also good news for Greece,” said Leonidas Fragiadakis, group treasurer at National Bank of Greece, the country’s biggest bank. In Spain, Mr. Zapatero has been lambasted in the media for his response to the Greek debt crisis. He tried to regain the political high ground Wednesday by calling for the opposition to support legislation meant to restore the Spanish economy to fiscal and competitive health. “The government is asking for and offering consensus, with good will, involving all the groups in this house,” Mr. Zapatero said in a speech to parliament a week after King Juan Carlos said political parties, business and unions should come together to dig Spain out of its hole. But Mr. Zapatero’s call for the legislation to be approved by consensus in the first half of the year met with a cool reception from the leader of the conservative opposition, Mariano Rajoy, who suggested the prime minister resign. Economy Minister Elena Salgado will lead talks with other parties over key measures, including a €50 billion savings package designed to cut Spain’s budget deficit from 11.4 percent of GDP in 2009 to the mandated E.U. limit of 3 percent by 2013. “We’re committed to these projects,” Mr. Zapatero said, but added: “But we are open to talk about other issues or to discuss different emphases with regards to these projects.” Mr. Rajoy said Zapatero’s proposal lacked credibility. “It’s not Spain that inspires lack of confidence, it’s you and your government’s way of handling the economy,” Rajoy said, asking for the government to reverse tax increases, including a rise in value-added sales tax. There were some encouraging signs in Wednesday’s economic reports: Data showed fourth quarter household consumption rose by 0.3 percent in quarter-on-quarter terms, the first rise since 2007. Mr. Zapatero said he expected the economy to resume growth in the first half of the year, but economists were not convinced a serious turn around was likely any time soon. “It’s going to come in handy for the politicians to say ‘We’re coming out of recession,’ but it’s not going to make any material difference,” said Jose Garcia Zarate at 4Cast. “2010 is going to be a very rough year, not as rough as 2009, but pretty rough anyway.” While the spread on Spanish Treasury bonds has spiked during the Greek worries, many economists say that the country’s relatively low level of public debt to GDP means it faces little immediate financing problems. Story from NY Times

See more here:
Spain Cheered by Strong Bond Issue

Even in this dreadful recession, it is hard to imagine that the desire for apartments in Spain from North Europeans will subside. It is one type of Spanish property that will always be popular. Certainly, few things are more more desirable than owning a low maintenance, low cost (and safe) holiday home. Indeed, to have somewhere convenient and familar for breaks away in the sun is, surely, one of life’s ultimate luxuries? The problem, as everyone knows, is that the Spanish property market is in crisis, which has been largely due to massive overbuilding. This is true of every sector – not least that of new apartments in Spain. So, what makes one apartment in Spain better than another? How should you assess what you are buying - and how can you purchase something that will retain its value or (over time) become a sound investment? Of course, ensuring absolute legality is one of the most fundamental aspects to buying a Spanish property and this is as true of apartments in Spain as it is of the more problem prone sector encompassing villas in Spain. However, apartments in Spain have their own particular danger and this revolves around the 1988 Coastal Law (Ley de Costas). The Coastal Law was designed to protect the integrity of the Spanish coastline – and in particular the beach area and the first 100 metres from the nearest point reached by the sea. The Coastal Law ‘divides’ the coastline into two areas of protection. The first is the ‘public domain’ which is, crudely, the area between the sea and the furthest point which the sea has touched in the worst known storm. This includes all areas of sand, shale and pebbles. The second area of protection is divided into: The Protection Zone. This is the first hundred metres inland from the public domain (although this area can be extended a further hundred metres by the Spanish state, autonomous region or local town hall). No building of any nature whatsover is allowed within this area. The Zone of Influence. This area extends for 400 metres inland from the Protection Zone. Building is allowed - however restrictions are applied on a reducing scale of severity as you move inland from the sea. Obviously, some properties in Spain were built within 100 metres of the sea prior to the Ley de Costas being passed. These can be subject to a ‘concession’ meaning that they can avoid demolition. However, any ‘concession’ must be treated with the very greatest possible care and should be subject to expert, independent advice from a Spanish land law specialist. Needless to say, the Coastal Law has been erratically enforced over the years. This has resulted in the construction of Spanish property that oftenly blatantly transgress the law. To put it mildly, this type of puchase could be disastrous - should the authorities decide (as they occasionally say they will) to enforce the law and demolish the offending buildings… My point is that you must be very wary of buying an apartment in Spain that is too close to the sea and that could be deemed to come under the Coastal Law restrictions. Of course, typically, the best apartments in Spain to buy are those that are ‘front line’. Everyone wants an unobstructed ‘sea view’ and quick, trouble-free access straight to the beach. As a consequence, it is these properties that are most in demand - and it is these that have retained their value and are excellent investments for the future. This is particularly the case if a ‘front line’ apartment in Spain is within easy walking distance of a lively area with shops, bars and other amenities. Certainly, the importance of proximity to amenities should never be underestimated, if you want your apartment in Spain to be a sound investment (and to be able to really maximise its use). The Spanish coastline is long and there are countless coastal apartment blocks stretching for miles away from any coastal town or village. However, many are often far from any real amenities and (normally) cannot be compared in value or desirability to those reasonably close to a pretty, lively and permanently lived-in area. A ‘permanently lived-in’ area is especially important, not least because many coastal apartment blocks are virtually ‘closed down’ out of season. Worse still, this is also true of the one or two surrounding bars or shops that are often open only during the Easter or summer period. Without doubt, the glory of Spain is the all-year round, excellent climate and few things are more depressing than taking a winter sun holiday in an area that is almost completely ‘dead’ out of season. A canny buyer will always recognise this point and ensure that any apartment in Spain he buys - is not dangerously compromised for most of the year. This affects not only personal enjoyment of the property but also, obviously, its re-saleability and potential investment value. From Nick Snelling’s latest book: How to Move Safely to Spain

More: 
What the Spanish Coastal Law Really Means

Recent periods of heavy selling in the Spanish stock market, in the wake of fears that worries over Greece will spread to other European nations, is reportedly being investigated by the country’s intelligence service. The unit of the National Intelligence Center that deals with economic intelligence has spent the last few weeks discussing the matter with Spanish companies and the stock exchange as well as other experts, according to a report in El Pais’s English edition on Monday. An official could not be reached for comment. The newspaper said the investigation is looking at whether there was any collusion in attacks by investors and the hostility shown by some sectors of the U.K. and Spanish press. Over two weeks ago, Spain’s IBEX-35 saw its biggest one-day loss since 2008, in the wake of worries over Greece and fears Spain might have similar economic worries. See related story on Spain The government has been battling a tidal wave of bad news and sentiment from inside and out. Prime Minister Jose Luis Rodriguez Zapatero has hinted on a number of recent occasions that criticism by the U.S. and British media is part of an effort to undermine the euro. El Pais said in private he has been taken aback by just how aggressive some parts of the foreign press have been with Spain. Paul Krugman, the Nobel prize winning economist columnist with the New York Times, is practically persona non grata for his comments on Feb. 4 after a blog posting that said Spain was the euro zone’s biggest trouble spot. Salgado responded by saying that analysts and media from outside the euro zone did not understand how the bloc worked. Krugman was at it again on Monday, writing in his column for the New York Times, that Spain’s core economic problem is that prices and costs have gotten out of line with those in the rest of Europe and there isn’t much that the government can do to make it better, as its economy is locked into the euro. “This is McCarthy-style witch hunting,” said analysts at UBS in a note to investors on Monday, in response to the report in El Pais. “Spain was a victim of joining an inappropriate monetary union and a Ponzi scheme housing market.” Story from Market Watch

Here is the original:
Spanish Intelligence Investigating Market Slurs

The number of houses sold in Spain fell 0.3 percent in December from a year earlier, the 24th straight month of declines, the National Statistics Institute said on Wednesday. The drop compared to an annual fall of 2.6 percent in November and a record slide of 47.6 percent in April. The sale of homes fell 7.7 percent in December from November, the data showed. Spanish banks have been told by the Bank of Spain to devalue the housing assets on their books by 20 percent, El Mundo reported on Wednesday, citing sector sources. The Bank of Spain was not immediately available for comment. Spain’s banks hold an estimated 100 billion euros ($137.1 billion) worth of Spanish property , the newspaper said, taken on over the last couple of years as property companies went bankrupt and their creditors forced to mop up their unsold assets. Analysts are concerned the country’s banks have been keeping a lid on potential losses by valuing the homes on their books at pre-crisis levels, while real property prices have dropped by more than 14 percent from their high in 2007. Spain’s second largest bank BBVA shocked investors at the end of January when it reported full year earnings with higher than expected provisions, raising broader doubts about Spanish banks’ ability to absorb a property market crash. Story from Interactive Investor

View post: 
Two Years of Declining Spanish Property Sales

Investors still not convinced that Greece can sort itself out without external help. Sterling and euro lumped with ‘risky’ currencies as dollar and yen push ahead. A one-cent range held sterling between €1.14 and €1.15. It opened in London this morning half a cent down on the week at €1.14. Until a month or so ago the world’s investors were still dismissing the fiscal problems of Greece as nothing more a little local difficulty in an unimportant south eastern corner of Europe. They were far more interested in how the German and French economic locomotives were hauling the rest of the continent ahead. Now, the tables are turned. Hard economic data, good or bad, get barely a moment’s attention. Instead, the focus is on the fiscal crisis in Greece which temporarily overshadows not just the euro but every currency and every market. The European Commission, the European Central Bank and the Euroland governments appear to have hardened up their attitude to Athens and the message to Prime Minister Papandreou is ‘Sort yourself out or else.’ Investors worry that it will not be as easy as that. Especially during the second half of last week the overriding sentiment among investors was a nervousness about everything. In a return to the risk-aversion tactics of last year they offloaded shares and reduced their holdings of ‘risky’ currencies, stocking up instead with the safe-haven US dollar and Japanese yen. Whilst it would be an exaggeration to call the trend a ‘flight to safety’ it was certainly a sign that there are still plenty of niggling doubts to trouble investors. Despite all the public optimism that a double-dip recession is out of the question, the market mumbles to itself about the risk of just such an outcome. As long as that mindset persists, national economic statistics and achievements will have to be spectacular if they are to offset investors’ underlying attitude to particular currencies. This was clearly the case last week for sterling. The purchasing managers’ indices (PMIs) are an important economic barometer, showing growth when they rise above 50 and pointing to a slowdown when they move below that level. Monday’s UK manufacturing sector PMI came in at a surprisingly strong 56.7, beating equivalent figures from France, Germany, Switzerland and the Euro zone. With sterling in their bad books, investors refused to be impressed. At 54.5 Wednesday’s services sector PMI was higher than any of the opposition but, because it was two points lower than the previous month, investors used it as an excuse to sell the pound. It was a similar story with the euro, which stayed ahead of the pound only by dint of losing just two US cents compared with sterling’s three. The what-shall-we-do-about-Greece story dominated the proceedings, especially after the ECB president downplayed the expected pace of economic recovery to ‘gradual’ and made no reference to higher euro interest rates in the near future. After spending the best part three months between €1.09 and €1.13 the pound is doing its best to attach itself to a slightly higher range between €1.13 and €1.16. Do not get carried away: although the euro is lumbered with its Greek albatross the worries are still there about Britain’s general election, its budget gap and the durability of its credit rating. Buyers of the euro should take advantage of any spikes to hedge 50% of their exposure. Get the best foreign exchange rates with no bank fees or commission charges using your Moneycorp Privilege Card

Read the original: 
Foreign Currency Markets Overshadowed by Greek Problems

Who to believe? In the news this week, one commentator declares the Spanish property industry bankrupt. At the same time, a developer in Almeria has raised prices as a “signal that things are getting better”. In Spanish Property Industry Bankrupt? , we read that developers have raised the cost of credit for the entire nation and that Banks are buckling under the weight of their toxic real estate assets. Compare and contrast: Spanish Developer Increases Prices where we read that one developer in Almeria has increased property prices by €30,000 per unit to “give a signal to people that things are getting better and they should have faith in the situation”. Personally, I think that sounds like hogwash, and their justification that: “Almeria is one of the up-and-coming areas of Spain so it’s not as overbuilt” is too broad a statement to warrant any credibility at all. As I mentioned last week , I actually do believe that things are picking up in Spain - perhaps not for any sound economical reason - but this kind of baseless hype does Spain’s faltering recovery no good at all. World attention has been focused on Greece and the possibility of it defaulting on its sovereign debt. Now that the EU has gone in mob-handed to sort out the Greek situation, attention has passed to the next most risky countries on the list. Enter Portugal & Spain. The situation in Portugal is undoubtedly worse than in Spain - but the Portuguese economy is so much smaller than that of Spain. This leaves Spain as the most significant European economy at the most risk of being unable to balance its books. Unfortunately, the policies of Mr. Zapatero have failed to inspire confidence. Spanish policy is being seen as all ‘bark’ and no ‘bite’. Mr. Zapatero’s refusal to deal with Spain’s labour and government inefficiencies is further damaging Spain’s international reputation - and credit rating. If this is the first Property Pulse newsletter you’ve read, you might be wondering “What’s this got to do with the Spanish property market?” The short answer is: Everything. The Spanish property market is, not surprisingly, dominated by Spanish buyers. 90% of properties sold will be sold to Spaniards and, even though the remainder will involve foreign buyers, the market is geared around and driven by Spanish buyers. 4 million of the country’s workforce are currently out of work. Spain is still in recession and nursing a huge hole in the public purse from a prolonged bout of spending designed to promote growth. While that tactic has worked elsewhere in Europe, so far it has only served to slow Spain’s slide further into recession - with a ‘recovery’ hoped for sometime later this year. The net effect of all this doom and gloom is that the majority of Spaniards are unlikely to take any kind of financial risk - risks like moving home or upgrading to a more expensive property. Spanish first-time-buyers have, quite literally, no way of getting on to the property ladder in Spain. Hence there is very little movement in the domestic Spanish property market. So, the demand for housing is suppressed, and the domestic buyer sets the benchmark for property prices in Spain. This is where foreign buyers of Spanish property can benefit from the inherent weaknesses of the Spanish economy - and the relative strength of their own - particularly other Euro countries such as Germany, France and the Netherlands. That’s why keeping an eye on Spain’s policies, its economy, its unemployment rate, its bank rates, foreign exchange rates and all the other financial indicators is a smart thing to do if you’re thinking of investing in a Spanish property. And that’s what we do here in the Property Pulse newsletter. Martin Dell, Kyero.com

Excerpt from: 
Spanish Property: Hogwash or Hope?

Who to believe? In the news this week, one commentator declares the Spanish property industry bankrupt. At the same time, a developer in Almeria has raised prices as a “signal that things are getting better”. In Spanish Property Industry Bankrupt? , we read that developers have raised the cost of credit for the entire nation and that Banks are buckling under the weight of their toxic real estate assets. Compare and contrast: Spanish Developer Increases Prices where we read that one developer in Almeria has increased property prices by €30,000 per unit to “give a signal to people that things are getting better and they should have faith in the situation”. Personally, I think that sounds like hogwash, and their justification that: “Almeria is one of the up-and-coming areas of Spain so it’s not as overbuilt” is too broad a statement to warrant any credibility at all. As I mentioned last week , I actually do believe that things are picking up in Spain - perhaps not for any sound economical reason - but this kind of baseless hype does Spain’s faltering recovery no good at all. World attention has been focused on Greece and the possibility of it defaulting on its sovereign debt. Now that the EU has gone in mob-handed to sort out the Greek situation, attention has passed to the next most risky countries on the list. Enter Portugal & Spain. The situation in Portugal is undoubtedly worse than in Spain - but the Portuguese economy is so much smaller than that of Spain. This leaves Spain as the most significant European economy at the most risk of being unable to balance its books. Unfortunately, the policies of Mr. Zapatero have failed to inspire confidence. Spanish policy is being seen as all ‘bark’ and no ‘bite’. Mr. Zapatero’s refusal to deal with Spain’s labour and government inefficiencies is further damaging Spain’s international reputation - and credit rating. If this is the first Property Pulse newsletter you’ve read, you might be wondering “What’s this got to do with the Spanish property market?” The short answer is: Everything. The Spanish property market is, not surprisingly, dominated by Spanish buyers. 90% of properties sold will be sold to Spaniards and, even though the remainder will involve foreign buyers, the market is geared around and driven by Spanish buyers. 4 million of the country’s workforce are currently out of work. Spain is still in recession and nursing a huge hole in the public purse from a prolonged bout of spending designed to promote growth. While that tactic has worked elsewhere in Europe, so far it has only served to slow Spain’s slide further into recession - with a ‘recovery’ hoped for sometime later this year. The net effect of all this doom and gloom is that the majority of Spaniards are unlikely to take any kind of financial risk - risks like moving home or upgrading to a more expensive property. Spanish first-time-buyers have, quite literally, no way of getting on to the property ladder in Spain. Hence there is very little movement in the domestic Spanish property market. So, the demand for housing is suppressed, and the domestic buyer sets the benchmark for property prices in Spain. This is where foreign buyers of Spanish property can benefit from the inherent weaknesses of the Spanish economy - and the relative strength of their own - particularly other Euro countries such as Germany, France and the Netherlands. That’s why keeping an eye on Spain’s policies, its economy, its unemployment rate, its bank rates, foreign exchange rates and all the other financial indicators is a smart thing to do if you’re thinking of investing in a Spanish property. And that’s what we do here in the Property Pulse newsletter. Martin Dell, Kyero.com

See the original post: 
Spanish Property: Hogwash or Hope?

The overseas homes market may have already entered recovery in some parts of Spain as one developer has started putting its prices up. Key Mare in Almeria has seen sales rise by 30% in the last three months and now has more international customers than Spanish ones. The company raised prices across its seven resorts in the area by €3000 per property at the start of January. “Almeria is one of the up-and-coming areas of Spain so it’s not as overbuilt as other parts of the coast,” said the company’s head of international sales, Stefan Kdist. “The Spanish have always known this area but now more British and Scandinavian buyers are finding out about it.” Until now, the company has been following the line of many Spanish developers and offering discounts of up to 25%. Developers and banks have been under pressure to lower prices further to help shift the large amount of unsold Spanish property accumulated during the boom. This tactic has worked to some degree, with companies such as Taylor Woodrow seeing sales improve in the last three months by offering discounts of up to 40%. Kdist said Key Mare’s sales increase represented an improvement in confidence but he also hoped the price rise would encourage buyers to feel better about the market. “We wanted to give a signal to people that things are getting better and they should have faith in the situation. Today, people don’t feel there’s such a risk of losing their jobs as they did a year ago. Most economies are recovering and prices and interest rates are low.” With many agents and developers in Spain still suffering the effects of the economic downturn badly, Key Mare’s success emphasises how diverse the market has become. The latest data on the Spanish housing market paints a generally negative picture. Prices continued a steady fall in the fourth quarter of 2009, dropping 6.2% year-on-year, according the country’s housing ministry. The number of transactions also fell 2.6% year-on-year in November, although this was down from a 21% fall in October and transactions rose 5.3% between the two months, according to the National Statistics Institute (INE). But there was some good news in that the number of mortgages rose 1.8% year-on-year in November 2009, the first increase since April 2007, according to the INE. Story from OPP (Registration required)

See the original post here:
Spanish Developer Increases Prices

Spain’s Cabinet will discuss spending cuts of as much as 50 billion euros ($70 billion) by 2013 as it aims to slash the budget deficit by two-thirds to meet a European Union target. The government will discuss the so-called austerity plan that aims to cut current spending in the central and regional administrations, said an official at the prime minister’s office in Madrid today who declined to be named in line with policy. Spain, mired in recession with the highest jobless rate in the euro region, has come under scrutiny amid concerns that smaller European countries like Greece may struggle to finance their growing debt. Even as Spain’s public-debt burden is about half the size of Greece’s, the risk premium on Spanish bonds has surged to the highest in nine months. Spain’s public-sector deficit probably amounted to 11.2 percent of gross domestic product last year, according to forecasts from the European Commission, which has set a 2013 deadline to cut the shortfall to the 3 percent EU limit. The country’s debt burden is set to double from before the crisis to 74 percent in 2011. Spain’s economy has been contracting since the second quarter of 2008, pushing the unemployment rate to 19.4 percent as the collapse of a construction boom destroyed more than a million jobs. In response, the government created one of the biggest stimulus programs in Europe, putting builders back to work, and extended jobless pay for the long-term unemployed. To shore up state finances and convince investors about its deficit-cutting plans, the government raised taxes on income from savings in 2010 and will increase value-added tax in July. Bank of Spain Governor Miguel Angel Fernandez Ordonez said more needs to be done as reining in the deficit is the most “urgent” priority, along with overhauling labor rules. “It will be necessary to implement, in each component of spending, deep structural reforms,” he said in a speech in Vigo, Spain. Story from Bloomberg

More here: 
Spain Targets €50Bn Spending Cuts