JUNE 2012 |www.opp.org.uk


NEWS Spanish crisis getting worse 6 By: John Howell


losses from a property market decline have suffered a setback after the European Central Bank (ECB) rejected proposals to push €19 billion of funding in Bankia’s direction by swapping sovereign bonds of this value for cash.


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Bankia announced on Sunday (May 27th) that it had asked the government for a bailout after a sharp fall in the


pain’s plans to recapitalise one of the country’s largest banks following signifi cant


market for real estate in Spain increased its bad property loans.


“The Spanish state will inject capital into Bankia and the obligation of a company that receives capital, regardless of from whom, is not to return that capital, but to be capable of generating value and offering a return on that investment,” Bankia executive chairman Jose Ignacio Goirigolzarri said at the time. However, the ECB has told Spain its swap plan cannot go ahead, stating that a more adequate capital injection proposal is needed to avoid


OPP COMMENT The whole Spanish crisis feels like it is not even a case that the problem is obvious: our feeble minds are simply not capable of dealing with it. We don’t even know the size of the problem. The people I speak to in the banking and property industries tell me that the extent of the Spanish banks’ exposure to the real estate disaster is far, far higher than has been disclosed. Some say four times higher, some say ten. Either way, until we know the size of the problem we can’t think sensibly about a solution. Either way, the solution isn’t going to be pretty. We’re promised the report of the EU auditors sometime next month. Do we have confi dence in its accuracy and objectivity? In any event, it may well prove to be too late.


contravening a ban on central bank funding to state governments currently in force in the EU. Offi cials in Madrid say the ECB should help Spain to avoid risking the single currency system.


Germany’s sell-off Turk law T


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TOP TEN | 11


Brazil’s market is kicking off 9


BRAZILIAN property is becoming a greater attraction overseas buyers as foreign currencies dominate the Real, according to a local agency. The Brazilian currency has fallen


by 28% against the Pound from June last year, according to uv10’s sales manager Samantha Gore, while the U.S. Dollar is at a two-and-a-half-year high. Elsewhere the Euro has hit a two-year high against the Real. And Gore believes this is causing


Brazilian property to be highly attractive. Elsewhere Brazilian Finance Minister


Guido Mantega has said that the fall in the Real’s value will help boost demand for Brazilian products. “The weak Real is benefi cial for the


Brazilian economy because it makes Brazilian products more competitive,” Mantega said. Upcoming events and falling


interest rates are also generating optimism about Brazil’s short-term future said Gore. ‘The middle class continues to


urkey’s relaxation of property buying laws for foreigners could see $20 billion-worth of


overseas property investment pour into the country, according to the country’s second biggest real estate investment trust. A statement by Torunlar Gayrimenkul Yaltrim Ortagkligi AS (TRGYO), said the Gulf would provide the biggest boost, with Azerbaijan, Iran, Kazakhstan, Qatar and Saudi Arabia would be the major sources of demand, it added. The statement comes after the


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Turkish government abolished a rule barring property purchases by citizens of countries where Turks weren’t allowed to buy real estate.


he fi rst of many anticipated major real estate transactions involving banks selling off German portfolios has been completed, as Barclays sells the 23,500 apartments that comprise the BauBeCon group to German real estate group Deutsche Wohnen for 1.24 billion Euros.


The property purchased this week has an impressive average vacancy rate of just 2.7%. Equity and debt will be used to fi nance the deal, in which Wohnen is paying about 13 times


annualised net rent. Deutsche Wohnen will increase its portfolio to 73,260 homes as a result of the transaction, the Frankfurt- based company said in statement on May 27th. The company added that additional properties will generate 95 million Euros of gross rental income a year. Chief executive offi cer Michael Zahn said that the company plan to sell almost a fi fth of the apartments; divesting properties in medium size cities such as Bremen to focus on Berlin and Frankfurt.


Prior to the change overseas buyers


in Turkey were spending around $2.5 billion annually, according to TRGYO chairman Aziz Torun.


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grow, fuelling demand for property and keeping prices on an upward trajectory, at least for a few more years. Benchmark interest rates have just been lowered to 9%, which is great news for local buyers eyeing a mortgage and developers seeking fi nance for new projects,” she said.


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Dubai agent rating plan BETTER HOMES, a leading Dubai


estate agent, has taken the unusual step of allowing the public to rate the performance of its individual agents. The results are shown on its website – www.bhomes.com – when you search for a property ‘by agent’. They also show each agent’s rating for ‘business strength’, which is undefi ned but, it appears, not voted by the public. They seem to have got a decent level


of feedback. This is an interesting and brave


Breakthrough | Turkey has opened up


decision and to be commended, though (perhaps predictably) the blogs are talking about self-promotion. It would be even better if the assessment criteria were also made public. What would be very interesting, and hugely useful to Better Homes, would be to work out why Svetlana Gorbach (257 sales) is rated by customers at 9.6/10 whilst Tarek Gouda (105 sales) is rated at 4.8. Well done Better Homes. Will anyone follow their lead?


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