DEC 2012/JAN 2013 |www.opp-connect.com Contents


CONTENTS ON THE RECORD THIS MONTH... FSA Response (9-11)


The UK Financial Services Association published a consultation paper several months ago – and we at OPP decided a response was necessary. We’re not experts on the subject, but it is aff ecting our industry more and more as time goes on. Following lengthy dicussions, meetings with experts and quite a bit of typing, here it is...


05


06-07 08


Top Ten Marketing Tips (26)


It doesn’t matter how good your product is – if it’s not well marketed the chances are it either won’t be noticed or, worse, will be noticed for entirely the wrong reasons. Candice Ritchie heard the experts giving their top ten tips for staying ahead of the game in marketing


9-11 12 15 16 18


Spain - The Big Issue (34-37)


OPP’s ‘Big Issue’ trip to Spain uncovered some interesting truths about the country’s ‘crisis’. Our editor delves deep into the market that’s seldom been out of the industry’s news since the global downturn. What’s happening? Why? What are we going to do about it?


20-21 23 24 26 28


Round Table (42-45)


Retirement – it’s hard to exaggerate the impact this fast- growing market will have on the property world. This month’s ‘virtual’ Round Table focuses on the practicalities; the wants and the needs of a budding ex-pat retiree. The article’s full of great tips and information, but interestingly only one subject caused controversy amongst our experts...


30-33 34-37 40-42 43-45 48-50 51


Packaging Lifestyle Products (52-53)


Selling to people wishing to change their lifestyle is a diff erent business to selling for investment. Rather than looking to line their pockets, these buyers simply wish for a taste of something better... learn here how to provide it to them (and how to make sure they notice that you do!)


52-53 54-55 56-57 58


OPP ‘Doing Business’ Tours (64-65)


Hurrah, our fi rst tour (to China) was a success! Six days, four cities, 18 delegate companies and a whole lot of strong leads. Hear the ins and outs from John Howell and the delegates, then feast your eyes on page 65 to see what we’ve got up our sleeve this year...


61-62 64 65 66


EDITORIAL COMMENT


NEWS: WORLD ROUND UP This month’s biggest stories at a glance


NEWS ANALYSIS Experts are predicting what will happen in 2013


FSA RESPONSE OPP responds to the FSA consultation paper


SUSTAINABILITY Reports and progress in the industry


MOVERS & SHAKERS Who’s doing what in the industry?


DIARY OF A... Stefano Lucatello reviews his experiences in 2012


OPP AWARDS The judges who picked our winners


LEGAL ROUND-UP Legal news from around the world


TECHNOLOGY A look at the new real-estate website HomeLight


TRAINING Paul Owen reviews his best questions


TOP TEN MARKETING TIPS Candice Ritchie reports back from OPP Live


YOUR SHOUT Our pick of the letters and blogs


COUNTRY REPORT: US All the need-to-know facts & fi gures


SPAIN - THE BIG ISSUE A review of Spain’s market position - is it in crisis?


VISAS FOR SETTLEMENT Who does it best?


ROUND TABLE Retirement market – the practicalities


LETTERS FROM India, South Africa, France, Russia & US


DUE DILIGENCE RyCal explains the importance


PACKAGING LIFESTYLE PRODUCTS How to sell lifestyle property


MORTGAGES Dubai


FX REPORT US Dollar


RETAIL DISTRIBUTION REVIEW Candice Ritchie looks at the RDR as it’s enforced


THE LAST WORD Interview with Robert Gavin


OPP CHINA TOUR A review of the OPP ‘Doing business in China’ tour


OPP SOUTH-EAST ASIA TOUR A look at the upcoming OPP South-East Asia tour


PROBLEM PAGE Legalising Spanish coastal properties


| 03


results. Anyone involved in the world of international property should read this report – even if t business in Spain. Spain led the way – both up and down. Where are they going next?


you will know that, after the economic collapse of 2007/8, the property industry in Spain suffered badly; really badly. Of course, it was not alone in its sufferings but, arguably, it suffered most.


U


What went wrong? So what went wrong? More importantly, what is being done to put it right? With the benefi t of hindsight, what


went wrong is blindingly obvious. The world went mad – and Spain led the way. In the years up to 2003 Spain built steadily but then the volume of


nless you have spent the last fi ve years on Mars or you are brand new to this industry


construction exploded. Between 2003 and 2006 the number of properties built each year doubled (Fig. 6). Many – probably the majority – were sold to so-called investors, encouraged by easy money and the delusion that prices could never fall. Similar trends were seen elsewhere in Europe but nowhere else was the increase as dramatic. Consequently, when the fi nancial


crisis hit and the easy money dried up, the collapse in Spain was brutal. Sales collapsed, both to the local and the international market. (Fig. 2) Investment collapsed. New construction collapsed. Time will tell whether the economy will collapse. By 2011 the number of sales to


Fig. 1 - ‘Bad’ loans taken on by the Bad Bank Source: Central Bank of Spain


Region Cataluna


C. Valenciana Madrid


Andalucia Galicia


Castilla La mancha Canaries Murcia


Castilla Leon Aragon


WORDS | John Howell Value


(Euros millons) 3.817 3.354 2.712 2.122 1.295 951 798 794 519 364 193


Percentage


21% 18% 15% 12% 7% 5% 4% 4% 3% 2%


1% 1%


foreigners was down to about 20 in the whole year. Total sales fell from 1 million in 2006 to 350,000 in 2011. Yet it is important to note that the fall in sales volumes has not been the same throughout Spain. For example, compare the sales for the Province of Malaga – basically, the Costa del Sol – with those for Spain as a whole. (Fig. 4) New construction fell to one sixth of its peak levels as developers and,


“What went wrong? The world went mad – and Spain led the way”


increasingly, their banks struggled to dispose of vast numbers of unsold properties. (Fig. 6) Needless to say, the number of new


construction licences for new buildings has also fallen dramatically. (Fig. 7) Lots of available product and little


demand have led to a substantial fall in prices. The falls vary hugely depending upon the place, type of property and price point involved but falls of 50% have been common. Prices are still falling, down about


15% in the last 12 months, but – once again – they are falling at different rates in different places. The graph (Fig 5) shows the falls since the peak at the beginning of 2007. It understates the variations. For example, there are huge differences in what has happened to prices within the Region of Andalucia. There is some debate about the


Practical Retirement T


his is an unusual “Round Table”. It is not self-contained. It picks up on all of the


background information set out in our retirement feature (OPP November issue, pages 43-45) and it is a virtual Round Table – picking up on the content of the OPPLive seminar about retirement and subsequent discussions with people interested in the subject rather than reflecting the views expressed at a special lunch held for the purpose.


As we reported at length in last


month’s issue, the retirement market is vast. Not only is the number of over- 60s and over-65s increasing rapidly in all of our traditional markets, the rate of increase is accelerating.


Better still, the same population groups are also increasing rapidly in China and other emerging markets and large numbers of these people have the money and the wish to retire overseas


The Experts


Jeannie Lumb is a director of LaLuz Properties, based in the UK but deal- ing with property throughout southern Spain – one of Europe’s foremost retirement destinations. She is also a board member of AIPP. She can be contacted by email at jeannie@laluzproperty.com or on +44 1937 843131.


ional, based in


Where do people want to buy? Overwhelmingly, people buy retirement property in places that have a good climate. Fortunately, people’s definition of a “good climate” varies substantially. Generally, they’re looking for warm winter temperatures and summer temperatures that are not too hot. They are looking for places with some, but not excessive, rainfall. They


– normally to a place where the climate is a lot more agreeable than they find at home and where they will find other people from their own country. The two graphs (Fig 1 and Fig 2), previously printed last month, make the point with startling clarity.


For the purposes of this article we have moved beyond – and taken for granted – the size and potential of this market and we’re looking at the practical issues that will help you get your fair share of it.


are looking for places with plenty of sunshine. However, there are many locations around the world that meet these perimeters because people’s thresholds of what is acceptable


“People buy retirement property in places that have a good climate. What that defines does vary”


vary greatly. Many find the summer temperatures in Spain too hot for comfort whilst others find the summer


number of properties remaining unsold. The most dramatic estimates go as high as 3 million but the more likely number looks like about 1 million new properties plus about 500,000 resales.


ForeignersSource: INE Number of


Period


Q2/2006 Q3/2006 Q4/2006 Q1/2007 Q2/2007 Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008 Q4/2008 Q1/2009 Q2/2009 Q3/2009 Q4/2009


Transactions involving a


Foreign Buyer


29.097 23.798 26.455 27.362 25.097 18.521 16.224 12.179 11.130 7.843 6.562 5.036 6.002 5.923 7.416


The banks already own over 600,000


homes and are probably in a position to repossess nearly as many again. The effective value of those properties is small, leading to vast (and as yet unquantifi ed and partly hidden) losses in the banking sector and the formation of SAREB – Spain’s ‘bad bank’ to take over these toxic debts. The loans and properties are


concentrated in a relatively small part of Spain. 66% by value are in ju regions – Cataluna, Valencia (


Continuing our focus on the fastest growing property market in the world – retirement – we take some expert opinions on the more practical aspects of building and selling for the silver dollar. Where do people want to buy? What do they want to see when they get there? Is there a market for sheltered housing? Find out here


weather in Normandy rather cool. Both locations, therefore, have great retirement potential.


There is even a market for retirement property in places that don’t even come close to fitting these perimeters. People buy retirement homes in the mountains of Bulgaria or on the ski slopes in Aspen.


Often, these will be second homes


which offers us the delightful prospect that people retiring may buy not just one but multiple properties to enjoy during their years of leisure. True, not that many can afford to do so, but the numbers are quite surprising. Many people are selling very valuable properties in major cities around the world and generate more than enough money to buy a nice principle retirement home and a small secondary home.


Often, that secondary home could be near their children.


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