DEC 2012/JAN 2013 |
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accounted for 12% of Spanish GDP, more than double than UK or France.
What is being done?
Over the last twelve months, as the fi rst hints of optimism have come back into the international property market place, there has seldom been a discussion about the future of our industry without the crisis in Spain featuring prominently in it. Yet the silence from Spain has been eerie. This is surprising; almost unbelievable. Spain was the birthplace and the epicentre of the mass market in international property. Those working there were innovators, boiling over with ideas, masters of marketing and adapting to changing market conditions. Their activity spread far outside Spain, throughout Europe and beyond. It almost seemed as if
“The banks own 600,000 homes and are probably in a position to repossess as many again”
they were the international property industry. Of all the things you might have expected from them in the face of a crisis, silence was not one. No-one seemed to be taking any
concerted action. Not the government, not the construction industry, not the banks, not the agents.
What have they been doing? So what have they been doing about the problem? Can it be fi xed? What are their plans? OPP went to Spain to fi nd out. But fi rst we went to the Spanish
Embassy in London. By pure coincidence, just a few days before the start of our mission to Spain, the editor of OPP and the editor of OPP Connect were invited to take part in a small ‘round table’, chaired by the Spanish ambassador, His Excellency Don Federico Trillo-Figueroa Martínez- Conde, to discuss this very problem and to hear about some initiatives proposed by the Asociación Provincial de Constructores y Promotores de Málaga – if you hadn’t guessed, that’s the Malaga Association of Constructors and Promotors (MACP), with the backing of the Spanish government.
FEATURE Now, if Spain has been the epicentre
of the international property industry, the province of Málaga – with its Costa del Sol and world class concentration of golf courses – has, for decades, been right at the heart of activity in Spain, so the thoughts of APCPM are clearly important. Also shortly before our departure,
APIRIM, the Murcia Association of Promoters, held a larger and much more glitzy event in the La Manga Club in order to discuss the same problem. If Málaga is one of the aristocrats of the Spanish property world, Murcia is the Bill Gates: a newer arrival with a massively successful product that has sold in vast numbers. So their views, too, are important. So we went to Spain able to discuss
not only the crisis but also the views of two of the key players that need to be involved in solving it. During a series of meetings with
estate agents, developers, lawyers, government offi cials, ordinary buyers and others, several things became clear.
1. There is no Spanish Property Crisis There are many different crises as each market in each place is very different. The situation and the prospects in the province of Málaga are different from the situation and prospects in the provinces of Almeria, Murcia or Alicante. In fact, even within a particular
province, the situation differs dramatically from place to place. The problems – and solutions – in Marbella are very different from the problems and solutions in Nerja or Coin.
2. There is a serious crisis in the Spanish property market and industry Although the extent of the crash varied from place to place, it was devastating everywhere and in every sector of the industry. “In 2006 we had 700 constructors
and promoters in our association,” said Dª. Violeta Aragón Correa, the secretary General of MACP “Now we have 400.” For estate agents, it is no different. In Alicante province, Des Rowson, owner of DLR Properties, who has been selling property in the Costa Blanca for over 25 years, told
What’s going on?
1. There is no ‘Spanish’ Property Crisis 2. There is a serious crisis in the Spanish property market and industry but it dif- fers in nature from region to region and place to place 3. No-one trusts the government to do anything useful to help 4. Almost everyone thinks the problem is too big to be solved by individual initiatives – yet few are ready to work together to take eff ective action 5. No-one is expecting volumes to recover to anything like 2006 levels 6. Most expect prices to fall further, certainly at the bottom end of the market.
OPP: “Since 2006 the number of fi rms of estate agents in our area has fallen by about 50%. We have cut our own staff by at least 50% – many former employees are still working with us but on a freelance basis – and cut back on all unnecessary expenditure. Our sales volumes are probably down 80% since 2006 – but they are slowly growing again. However, commission levels have fallen and everyone wants a discount. In Murcia it is a little different. Sales to foreigners are down
90% but now picking up a little. In Marbella, sales at the bottom end of the market (below about €500,000) are down 50-75% but sales of high value properties have held up well and are now strong. Chris Clover, CEO of Panorama Properties – who have been selling top
CRISIS IN SPAIN | 35
quality property in Marbella since 1970 – told us “2012 will be our best year since 2004.” As for lawyers, if sales fall they also hurt. “We have virtually stopped doing any ordinary property transfers” said Oscar Abetti, the senior partner of BCP abogados. “The size of our property law team has been reduced by 75%. Now we deal with the sale of repossessions for banks and a lot of litigation.”
3. No-one trusts the government to do anything useful to help. “Spain is hugely and expensively over governed. We have fi ve levels of government, each staffed by politicians who think being a politician is a licence to make themself rich” said Manuel Castanon in an interview with OPP. “We can’t solve this without the government but don’t expect much help
Fig. 3 - Spanish House Prices - Value in GBP Start Price: €200,00.00 Value in £s: €134,720.00
Quarter
2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2
Index
13.10% 11.60% 9.20% 5.70% 2.80% -0.30% -3.00% -5.40% -7.60% -7.70% -7.00% -4.30% -2.90% -0.90% -2.20% -1.90% -4.10% -6.80% -7.40%
-11.20% -12.60% -14.40%
Current value (% of cost) Current Value in £s Profi t
% profi t Value
€226,200 €223,200 €218,400 €211,400 €217,319 €210,766 €205,058 €199,984 €184,786 €184,586 €185,985 €191,385 €185,835 €189,663 €187,175 €187,749 €180,051 €174,982 €173,855 €166,721 €145,714 €142,713 71.36%
£114,656
-£20,064.31 -14.89%
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