Spain Real Estate News

 MADRID, July 30 (Reuters) - Spanish property company Aisa said on Wednesday it had asked to delay a payment due on a syndicated loan granted on August 2, 2007.

The loan expires on August 2, 2008, the company said, adding that it plans to renegotiate its debt totalling 400 million euros ($623.4 million), of which 210 million is financial.

Aisa said it has hired Ahorro Corporacion to handle the renegotiation with 15 financial institutions led by savings bank Cajasur.

The property company also said it intends to seek an initial six months delay -- with an option to extend a further six months -- on the coupon related to its bond issue from August, 2006

As a guarantee for the extension on the payment deadline, Aisa said it is putting up the group's properties in Arenys de Munt, Barcelona and will pay 7 percent interest on the delayed amount.

Spain's largest property developer Martinsa Fadesa has filed for administration and other large Spanish property estate firms are struggling to refinance heavy debts.

The property downturn is one reason Spain's economy has swiftly ground to a near halt, having been one of the fastest growing in Europe last year.

Source: Reuters

MADRID, July 29 (Reuters) - Permits issued for building new houses in Spain plummeted 57 percent for the year to May from a year earlier, the College of Architects said on Tuesday.

In a further sign that Spain's decade-long construction boom is over, the College said 143,918 permits were granted in the first five months of 2008, down from 336,263 in the same period of 2007.

The property downturn is one reason Spain's economy has swiftly ground to a near halt, having been one of the fastest growing in Europe last year.

Spain's largest property developer Martinsa Fadesa has filed for administration and other large Spanish property estate firms are struggling to refinance heavy debts. (Reporting by Carlos Ruano; Writing by Martin Roberts; Editing by Andy Bruce)

Source: Reuters

I was talking to a friend today who's an estate agent and he was telling me about some trouble he's going through with the sale of a villa.

He's been working on the sale of this property for over 9 months, with both the seller and the buyer proving incredibly difficult.  I can personally vouch for the amount of time and effort he's put into this sale.

It now transpires that they are all happy to proceed with the sale....but the seller no longer wants to include the agent's commission as part of the transaction!

Even in the current dire market conditions some agents are still managing to keep their heads above water and it really bothers me that the decent ones are getting into such grief when every sale matters.

If you've found a buyer through an agent and agreed a commission with them, then it's only fair that they respect the terms of the original agreement.

Anyone got any advice for my friend?

Spain's finance minister Pedro Solbes has stunned the markets with an admission that his country faces the worst economic crisis in its history as the full effects of the property crash spread through the economy.

"This crisis is the most complex we have ever lived through given the plethora of factors on the table at the same time," he told Punto Radio in Madrid, breaking with past efforts to put a reassuring gloss on events.

Mr Solbes said the Madrid bourse had suffered an "earthquake", crashing 27pc since the start of June. He blamed the toxic cocktail of high oil prices, the global credit crisis and the sharp slowdown in the key export markets of North America and Germany.

The comments follow this week's bankruptcy of Martinsa-Fadesa, Spain's biggest corporate failure. The property developer - with an empire of housing estates, hotels, shopping malls and hotels - collapsed after failing to refinance €5.1bn (£4bn) of debts. The company's demise was a textbook story of aggressive over-expansion at the top of the cycle, driven by high debt gearing. It has €11bn of assets.

Mr Solbes has pursued a rigorous "no bailout" policy, saying Martinsa-Fadesa took "excessive risks" and must now face the consequences. He has reportedly clashed with cabinet colleagues, who are now searching for any means to stop the downward spiral in the economy.

El Pais reports that house prices crashed by 20pc in the second quarter compared with a year earlier, based on 183,000 completed transactions.

The Martinsa-Fadesa collapse has sent tremors through the whole property and construction sector. The share price of giant developer Sacyr has halved over the past month.

The two banks with most exposure to the Martinsa-Fadesa are Caja Madrid, at €900m, and Banco Popular, at €400m.

Goldman Sachs has issued "sell" recommendations on a clutch of Spanish banks, including Bankinter, Banco Popular and Banco Sabadell, warning that the sharp turn in the credit cycle could prove worse than the recession in the early 1990s. "The consumer is more leveraged today than in any of the previous cycles," it said.

The ratings agency Standard & Poor's has not yet taken a decision on whether to downgrade Banco Popular and Caja Madrid.

In reality, this is unlikely to be the worst economic crisis in Spain's history. Philip II defaulted on his sovereign debts three times in the 16th century after he bankrupted the Spanish Empire to pay for his Counter-Reformation wars against Protestants. He crippled the Italian banking system in the process - much to the benefit of London and Amsterdam.

Source Kyero.com

The crisis in Spain's real estate sector will last until 2011 due to the large number of new homes already on the market, general manager for builder OHL Luis Garcia-Linares said on Wednesday.

There are between 500,000 and a million empty, new houses waiting to be sold on a market that has stagnated over the last year after more than a decade of robust growth, Linares said.

"The sector's problem is that we have a very significant stock level which needs to be absorbed," Linares said in a presentation.

Fears of a collapse of the country's property sector arose on Monday when property group Martinsa Fadesa filed for administration after it failed to meet conditions to refinance a huge debt pile.

Linares said OHL would not suffer directly from the real estate slowdown as its core business was focused on infrastructure rather than housing.

Source Reuters

GBP/EUR

Key data out this month:

UK:
Halifax House Price Survey
Nationwide Consumer confidence
BoE Interest Rate Announcement
 Nationwide House Prices

EU:
ECB Interest Rate Announcement
 German IFO (Business Sentiment) 

Impact of data in the market place:

We are still witnessing substantial concerns over an economic slowdown, supported by evidence that credit conditions are continuing to deteriorate; this was shown when GBP weakened to record lows near the 0.80 level against the Euro earlier in the month. As widely expected the Bank of England cut interest rates by 0.25% lowering the base rate to 5.00%. This was the third rate cut in 5 months as the BoE try and resolve the dilemma of slowing growth and inflationary pressures. There are expectations of further rate cuts over the next few months to help the economy which is thought to be being pushed into a recession following difficulties in the credit and mortgage markets – clearly this may have further negative implications for those expecting GBP/EUR to strengthen. The UK housing data remained weak with the Halifax Bank reporting house prices fell by 2.5% - the biggest monthly decline for 12 years, showing parallels to the 1990’s housing slump. Mortgage approvals also fell to a record low as mortgage tightening took effect. This latest trigger for doom and gloom in the UK press had an effect on Sterling, sending GBP/EUR to an all time low below 1.25. GBP/EUR did claw back slightly following reports that the BoE plans to allow banks to swap mortgage backed securities of Government bonds easing the credit conditions in the mortgage market.

The ECB left interest rates unchanged at 4% and in the statement which followed, ECB president Trichet spoke of further warnings to control inflation which has surged to its highest level for almost 16 years – this inflationary pressure has ruled out any ECB rate cuts in the near future. Despite some positive trends (within the German industrial sector, for example), there are still increased fears over the Euro-zone economy. With both economies on a rocky road, there is certainly some further volatility to be seen in the coming months ahead and something GBP/EUR buyers will need to be aware of.

Central bank rates:
UK (MPC)
Current rate: 5.00%
Last change & date of change: 10/04/08
Next Meeting:  8th May

EU (ECB)
Current rate: 4.00%
Last change & date of change: 06/06/07
Next Meeting: 8th May

High & Low of the month:
High: 1.2779
Low:  1.2346

Difference of cost on a €200k property:
£5,489.01

GBP/USD

Key data out this month:

US:
Unemployment rate slightly increased to 5.1% from a previous 4.8%.
FOMC minutes from March meeting show that the policy group has grown far more pessimistic about economic outlook. 
FOMC cut interest rates by 0.25% as expected.
US New Home Sales fall by -8.5%.

UK
Bank of England cut interest rates by 25 basis points to 5.00% as expected
UK unemployment rate remains steady at 5.2%.
Bank of England minutes show a surprisingly mixed vote over the UK interest rate decision. Only 6 members voted for a .25% rate cut with perennial dove Blanchflower voting for a .50% cut and 2 members voting for a hold.
UK retail sales show a fall coming in at -0.4%.

Impact of data in the market place:

In comparison to recent months the rate for GBP/USD has remained fairly stable and the range in which it has traded has been comparatively tight. The market has begun to demonstrate renewed resilience to any disappointing data releases and reactions to negative data are becoming less dramatic for both GBP and USD.
There is still little positive data coming from either economy but the markets ‘hard nosed’ approach to these releases is helping to level off the dramatic fluctuations that have seemed the norm of late. For clients this could mean a calm before the storm.  When the market is flat it can often be at it’s most dangerous, a coiled spring waiting to unwind!

Central bank rates:
FOMC; 2.00%
Bank of England; 5.00%

High & Low of the month:
High; 2.0049  04/04/08
Low; 1.9599   15/04/08

Difference of cost on a $250k property:
£2863.03


EUR/USD

Key data out this month:

From the UK:

The government announced £50 billion plan to swap bank mortgage debt for government bonds to ease the impact of the credit crunch on the housing market.
BoE cuts by 0.25% to 5%
Rightmove House prices for April drop by 0.1% (1st time decline since Rightmove start the Survey in 2002)

From the E.U:
ECB interest rates – held at 4.00% again (11mths running)
Eurozone unemployment stable at 7.1%
German IFO dropped to 102.4 from 104.8 in March

From the U.S:
University of Michigan Sentiment Survey hit a 26 year low.
U.S President launch the fiscal stimulus package (form of tax rebates to up to 130 million US)
Fed cut rate 0.25% to 2.00%
   
Impact of data in the market place:

There’s no doubt that the rapid appreciation of the Euro against the US dollar has been impressive. In fact, the EUR/USD pair has surged over 9 percent since January 1, 2008 as the Federal Reserve has aggressively slashed interest rates.

EUR/USD breached 1.60 for the 1st time as an ECB member suggested a rate rise was being actively considered.
Adding to this momentum, the Dollar strengthened, brushing off more distressing news from the housing market and taking comfort from a surprise improvement in weekly jobless claims. The odds on a further rate cut from the Fed were slashed and analysts started to talk about the potential benefits of Bush’s fiscal stimulus package, which is expected to start today and be spread out over coming weeks in the form of tax rebates to up to 130 million US households.

US housing data again put in a dismal performance with housing starts building permits for March reflecting the unequivocally bad news from that sector.

Indeed, the markets are already well aware that expansion has slowed dramatically. Consumer price gains accelerated in March, as measured by both the headline and core measures, which exclude volatile items such as energy and food. These signs of building inflation pressures have led traders to cut back speculation of aggressive rate cuts by the FOMC. The markets are almost always right when it comes to pricing in rate decisions, and if the FOMC policy statement released with the actual rate announcement suggests that inflation is now their predominant concern, the US dollar could actually rally significantly.

Longer-term indications still point to a chronically weak Dollar, and fiscal stimulus or not, we except EUR/USD to retain it’s attractiveness for investors, leading to new high later in 2008.

Central bank rates:
UK: (MPC): 5.00%
US (FED): 2.00%
EU (ECB): 4.00%

High & Low of the month:
High: 1.60186 (21/04/2008)
Low: 1.55155 (30/04/2008)

Difference of cost on a £200k property:
High: $320,372
Low: $310,310
A difference of $10,062

Source HIFX

Expats are facing the demolition of their homes in the latest town planning scandal to hit Almería province. Around 19 properties, all lacking building licences and first habitation certificates, are facing the bulldozers in the El Fas district of Cantoria.

Although the case has been going through the courts for almost two years residents only got to hear of the news late last month when they were served with a summons to attend the Justice of the Peace and were asked if they wanted to take part in proceedings against the accused.

The public prosecutor says the builders sold the properties to third parties despite knowing they had been built on non-urban land and without permits. He also reminded the judge that a court had ordered a halt to construction work in June 2006. Acting on behalf of the government, he asked for the houses to be demolished and for the expat home owners to be compensated.

Expats are claiming the local mayor, Pedro Llamas García from the right-wing Partido Popular (PP) party, and the solicitors who initially represented them, repeatedly assured them that the properties were all legal. An expat spokesman for the Cantoria Residents’ Association, who wished to remain anonymous, said they had been “led up the garden path” by builders, solicitors and the council, and suggested the latest scandal could be the tip of the ice-berg.

He said: “Around 200 other properties in Cantoria are going to be in the same position. We bought in good faith and it turns out we were lied to and defrauded by everyone.”He added bitterly: “We were viewed as sheep ready to be fleeced.”

At the centre of the case are two individuals accused of fraud. Defendants Karen Smit and Julio Piñeiro, who are named as the developers of the El Fas complex, have been charged with selling illegal properties. If found guilty the two could face up to two years in prison and fines of up to 22,000 euros each.

The charges are the result of an investigation in 2005 by the Guardia Civil’s environment protection branch, Seprona. Costa Almería News has had access to court documents related to the case dating as far back as 2006. Giving evidence at a preliminary hearing, Ms Smit admitted the homes in El Fas had been built without a licence. Sr Piñeiro, also giving evidence, said he spoke to “some people at the council who verbally agreed to the construction of the homes” and that ‘taxes’ had been paid.

In a further twist, Ms Smit is also the partner of Daniel Poetsema, who appeared seventh in the list of candidates for the PP at the last local elections and who is allegedly behind the sale of the properties. Controversially, Mr Poetsema signs himself as deputy mayor in all correspondence to expat residents, even though he is not a member of the ruling council.

Mr Poetsema has led an intense campaign to try to reassure the troubled expat community that “there are no illegal buildings in Cantoria”, claiming the area is exempt from town planning restrictions imposed by the Junta because of a local by-law. However, a legal source consulted over this matter dismissed Mr Poetsema’s claims as “rubbish”.

In another development, PP mayors and councillors from 18 municipalities, including Cantoria and Partaloa, meeting this week to discuss town planning scandals in Almería claimed they were being targeted by the socialist-led Junta for belonging to an opposition party. In a statement released after the meeting, the PP said the Junta “only applied the law strictly if the council had a different colour to the Socialist party (PSOE)”.Neither Mr Poetsema nor Sr Llamas García were available for comment.

Source: Kyero.com

60% of the 80,000 to 90,000 real estate agents in Spain have closed down, according to Santiago Baena, president of CGCOAPI real estate agents’ association. Even so, there is still “a little bit of adjustment” to expect.

Baena described the situation facing the real estate sector as a “severe adjustment” but denied that it is a “crisis”.

If there is any crisis, it is a financial one, argued Baena, and warned that the next set of financial results released by the big banks will be “scandalous.”

Baena sees the present situation as a necessary “cleansing” of the sector, and forecasts that this process will have run its course by the end of the year. Normality will return in 2009, but he warns that things will not be what they were in the boom years.

Source: Novocasa

While Spain has long been seen as the primary holiday destination for Britons looking for sun and beaches, a recent study indicates that Turkey is now well in the process of overtaking Spanish resorts when it comes to attracting visitors from the United Kingdom. This change, however, has a lot to do with concerns about the economy in Britain and the relatively low value of the British pound agains the euro. As such, Britons are increasingly looking for holiday destinations outside of the eurozone. While Budapest and Prague may top the list when it comes to weekend city breaks in East/Central Europe, Turkey is one of the few remaining sun destinations where Britons can enjoy better value for money, thanks to the existence of national currencies.

According to a report by the Co-operative Travel Company, a “seismic shift” is unfolding when it comes to the travel and vacation practices of Britons. The organization pointed out that for the past four decades, Spain was clearly the favourite sun destination for UK residents. This, however, is no longer the case, as Turkey appears to have overtaken this western European country, especially when it comes to travellers seeking package deals. Going on holiday in Turkey is now cheaper than travelling to Spain. In fact, a British tourist may save as much as £100 by choosing Turkey, where the average cost of a vacation stands at £357, compared to a Spanish holiday, which is priced at around £465.

Source: Car Rentals.co.uk

I was reading the following post today which highlights some interesting points.  Well worth reading

http://eurowatch.blogspot.com/2008/07/some-key-facts-about-spanish-housing.html