Spain Real Estate News

In Spain, the global financial crisis that erupted in 2007 ended a real-estate and construction-based asset boom, plunging the country into a recession that has yet to end, even as many other European economies have returned to growth.

As the unemployment rate has soared to more than 19%, residential-property buyers have defaulted on loans in massive numbers, as have property developers, overleveraged in a moribund market. As lenders have assumed the collateral on defaulted loans, local financial institutions—particularly unlisted savings banks—have collected properties valued at about €8.5 billion ($12.2 billion) over the past 12 months.

So far the banks have held on to the vast majority of these properties, hoping an eventual economic recovery will allow the disposal of these assets at acceptable prices—a strategy they successfully adopted during a recession in the early 1990s. Accumulating properties also stopped a sharp drop in prices, avoiding the painful write-downs banks are required to book when the value of their assets falls.

Until now the strategy has worked. Spanish property prices have been unusually resilient. Average prices have dropped by a modest 9% over the past 12 months. In the last five years of the housing bubble, average prices jumped 71%, according to Housing Ministry data.

But now banks are facing new demands for liquidity that will force them to sell more property. They are drawing up sales strategies, creating real-estate management divisions and offering discounts in an effort to lure buyers.

Solvency pressures on the banks come from several directions. First, the downturn has meant smaller inflows of cash held in deposits and bank accounts. Second, the Bank of Spain recently required local financial institutions to set aside more money to cushion potential losses from a drop in the value of repossessed properties. Banks must now set aside 20%--up from 10%--of the value of a property held on their books for more than one year. Finally, a big restructuring of the savings-bank sector is in the cards, for which banks need funds to clean up their loan books.

Such incentives to liquidate property portfolios have banks looking to sell. "Three of the five real-estate companies that have sold the most properties this year are controlled by financial institutions," says Manuel Romera, head of the Financial Sector Program at Spain's IE Business School.

Bank disclosure on property sales is limited. Unlisted savings bank Caja Madrid, Spain's fourth-largest financial institution by assets, said it has sold 600 properties from January to September for about €100 million and estimates it has €1 billion in real-estate assets. The bank launched a Web site, set up a call center and will have desks at some branches to sell properties.

Smaller rival Caixa Catalunya said it unloaded 800 properties from a total of 3,600 properties it reported owning as of May, while Banco Santander SA, the country's largest bank by assets, said it unloaded some 1,000 properties from January to October. In April it reported owning some €4 billion in real-estate assets.

However, banks "are realizing that unwinding real-estate assets is much more complicated than expected," says José Luis Suárez, financial management professor at IESE Business School. "The short-term outlook isn't positive."

In the absence of an active real-estate market, the process of price discovery could show market values of many properties are far lower than their book values.

Analysts say that some banks and saving banks, particularly small ones, could suffer losses in the first half of 2010. They say banks with high levels of expenditure to income may be in trouble.

"Growth and employment prospects for Spain are markedly more pessimistic and, together with falling support from immigration and foreign demand, it is difficult to argue in favor of any near-term housing market recovery, especially in the face of a massive supply overhang," HSBC said.

The research department of Spanish bank BBVA estimated in June that Spanish housing prices would fall by 10% in 2009 and by 12% in 2010. It envisioned a total 30% peak-to-trough drop. A new review in December didn't change that forecast.

According to the Bank of Spain, 70% of a total of €30 billion in real-estate assets owned by financial institutions is now in the hands of savings banks, many of which are comparatively small and regionally focused.

Were BBVA's estimate of the fall in house prices to prove accurate, the value of the €30 billion of real-estate assets held by banks could fall some €6.6 billion in the next two years.

To avoid these losses from becoming a bigger problem--perhaps necessitating state intervention—the Bank of Spain is encouraging banks to look for merger partners. The central bank believes that fewer, bigger banks would improve efficiency and strengthen solvency. More than a dozen of the country's 45 savings banks are now in tie-up talks.

So far, only one Spanish financial institution, savings bank Caja Castilla-La Mancha, has needed a state bailout. But two other banks—the Andalusian savings bank CajaSur and the Catalonian savings bank Caixa Catalunya—have already run into trouble after seeing default levels increase far above the industry average because of their high exposure to real-estate development.

As a result, both of the banks are now discussing mergers. Caixa Catalunya is talking with Caixa Tarragona and Caixa Manresa, which, if a deal goes ahead, would create the fourth-largest savings bank in Spain. CajaSur is talking with Unicaja and Caja Jaén, which would create the sixth-biggest savings bank in Spain by asset volume.

By LEIRE BARRERA

Source:  Wealth Bulletin

 Two stories to emerge over the last couple of days do not help the Spanish property market. The first concerns yet more foreign owned houses to be knocked down because of legal flaws. The second concerns Spanish banks being forced to sell off property portfolios.According to the Mail Spanish police turned up at the doorstep of a dozen or so homes owned by UK ex-pats just before Christmas and handed them demolition notices. The houses are located in South East Spain near Albox in Almeria. The building licences that a local authority had issued for the houses were made null and void by a higher court with the buyers’ saying they were unaware of the position. This issue is not limited to foreigners, even the Spanish themselves fall foul of these flawed planning permissions.

Polaris World, a privately held Spanish real estate company that develops golf courses designed by Jack Nicklaus, is in talks with lenders to avoid filing for protection from creditors.

The developer, whose courses designed by 18-time golf Major winner are dubbed the “Nicklaus Trail”, notified a court in Murcia about the talks with lenders, an official for the Murcia Superior Court said today in a phone interview. The company has three months to reach an agreement or it will have to file for protection from creditors, said the official, who declined to be identified.

In May 2009 the company’s lenders, including Banco Popular SA and Spanish savings bank Caja Murcia, agreed to cancel 970 million euros ($1.4 billion) of debt in return for real estate assets, according to a company filing. Polaris World still has about 900 million euros of debt, El Mundo newspaper reported.

Phone messages left with Nicklaus Design in North Palm Beach, Florida, were not immediately answered. Spokesmen for Banco Popular SA and Caja Murcia declined to comment. Calls made to Polaris World went unanswered.

Source:  Businessweek.com

BOXED in by a 12-foot high brick wall, grid-iron fence and a thick hedgerow, it is certainly a good place to hide if you owe up to 20 million euros.

Plush Villa Verbena, in Urbanisation Cortijo de Mesa, just a stone’s throw from Ikea, in Malaga, has all the trappings of wealth.

Aside from the 24-hour on-site security guards who survey the spotless suburban streets, the split level villa boasts five bedrooms and a large leafy garden.

But the biggest giveaway perhaps, is the sleek black BMW, which can be seen when looking at the house on Google’s innovative new application Street View.

For this is one of many cars owned by Andalucia’s most wanted Jose Luis Maseda, 67, who has apparently disappeared, as exclusively reported in the Olive Press last month, after wheeling and dealing for more than 25 years.

Claiming to be a lawyer, financial consultant and tax advisor, Maseda wooed hundreds of clients to invest their money from the confines of his Eurobrokers office, in central Benalmadena.

up to 100 former clients, are trying to track him down in a bid to discover what has happened to an estimated 20 million euros invested through him.

But now, the Fraud Squad, and up to 100 former clients, are trying to track him down in a bid to discover what has happened to an estimated 20 million euros invested through him.

Most peoples’ accounts are similar, with smooth-talking Maseda having been recommended to them via a series of third parties, or even local banks.

Billed as the key to getting a licence, buying a house, or successfully investing money, they were usually taken in by his excellent English and confident manner.

The Olive Press has spoken to around two dozen expatriates, some of whom now claim to be facing financial ruin.

A joint action has this week been launched by Fuengirola lawyer Juan Carlos Carrasco, who has signed up at least five clients.

These include Geoff Gales, 59, who claims that he and his family have lost up to 1.5 million euros through Maseda.

The boss of CG Properties Geoff Gales, 59, who worked closely with Maseda for 10 years, invested the money in a number of plots on a failed golf venture in Villanueva del Rosario, near Antequera.

He has spent the best part of the past year investigating the movements and behaviour of Maseda.

“I believe he has a questionable track record dating back some 35 years to when he first ventured down to the coast from Madrid,” he explained.

I discovered that he had taken out a mortgage in my name without my permission

“I spoke to one British doctor, for example, who claims to have lost money in one of his deals 33 years ago.”

Another case involves Fiona Tiernan, 57, from Ireland, who discovered that Maseda had taken out a mortgage in her name without her permission after she gave him her power of attorney.

“The first thing I knew was when I was contacted by Bankinter notifying me of a 92,000 euro mortgage that had received no repayments,” said Tiernan.

She has now filed a report to the National Police fraud squad in Benalmadena, who are investigating her case.

“How Maseda lives with himself confounds me. It would appear he has no conscience,” she added.

Getting his clients’ power of attorney, appears to be one of Maseda’s favourite methods.

Linda Smith, 51, from Bedfordshire, also discovered she had a 95,000 euro mortgage through Bankinter after signing power of attorney over to him.

The mother-of-two had initially been put in touch with Maseda after visiting the Benalmadena branch of Banco Popular.

“I had wanted to sell my house and Banco Popular recommended I spoke to Maseda.

“I went to see him and he told me that he knew people who could take the house off my hands, so I signed over my power of attorney to him and heard nothing.

“Some time later I was notified that I had apparently taken out a 95,000 euro mortgage with Bankinter and the house wasn’t sold.”

It emerged that Bankinter paid off the original 40,000 euro mortgage to Banco Popular and set up a new mortgage in her name.

“I never signed anything,” insists Smith. “No application forms. Maseda handled everything, even disclosing what he thought was my occupation and salary.”

The Olive Press has learned that Maseda was an official bank agent for Banco Popular – a very convenient relationship, especially as his offices were a two-minute walk away.

His website also claimed to be an authorised agent for numerous other banks, such as Halifax and Sol Bank.

At least one of these, Sol Bank, however, insisted to the Olive Press that it had no record of Maseda’s name or company.

Police confirmed the connection between Banco Popular and Maseda, but were quick to quash any suggestions of impropriety.

Detective Juan Martin, who is handling the case, explained: “Although there was definite interaction, I am sure bank employess were equally unaware of the man’s dealings.”

The complicated Eurobrokers saga dates back 27 years, when, in 1982, a youthful Maseda opened his own financial advisory company.

Born and educated in Madrid, the 39-year-old, like many fast young bucks of the time, saw the chance to make serious money on the Costa del Sol, which had become one of Europe’s holiday playgrounds.

His company Eurobrokers aimed to help people looking to invest in the lucrative Spanish property market.

Success soon followed and Maseda embarked on setting up “franchises” across the world in places as far flung as Bolivia and Ecuador.

One affiliate called Ecuacasa – part of the official ‘Eurobrokers Group’ – promises “to do whatever it takes to ensure the seamless purchase, sale or legalisation” of property bought in Ecuador.

The Olive Press did not receive a response from Ecuacasa after trying to make contact.

However, over the past five years, this apparent success only served to mask the mounting debts that Maseda was racking up with clients back in Spain.

Many of these were caught up in the failed golf development in Villanueva del Rosario, which is now mired in controversy and under investigation in the courts.

The Olive Press believes Maseda was involved in the sale of dozens of plots in the scheme, before it was passed by the authorities.

His motivation though seems almost entirely to have been based on one simple thing, money.

“He was absolutely obsessed by money, it was what drove him the whole time,” says a former client allegedly owed 174,000 euros by Maseda, who wishes to remain anonymous.

“The sole purpose of his existence was making cash. He was a spendaholic.”

And the evidence of Maseda’s work was always on display. Aside from his Malaga home, he also owned properties in El Pinar, close to Torremolinos, as well as Madrid and, allegedly, South America.

He carried all the trappings of wealth. He drove a black Mercedes, BMW as well as a BMW motorbike.

Appearances meant everything to Maseda. He sported a gold Rolex watch, the latest designer suits and would boast about having two house maids to help his wife Dolores.

“He lived a life of luxury, every Sunday morning he would religiously wash all six of the family cars,” explains Richard Taylor, former partner of Costa Property Services Spain – a company formerly linked with Maseda.

Another client, Victoria Pickles, 36, from Norwich, who bought a 100,000 euro house through Maseda, which, six years later, is still yet to be legalised, was instantly seduced by Maseda.

“He seemed very money-orientated and part of that drew me in. What sticks out in my mind is the big gold bracelet he always wore, as well as the pristine leather jacket.”

When the Olive Press managed to locate one of Maseda’s homes, near Malaga, we got a remarkable insight from his own sister-in-law, Choni – who lives in the other half of the house.

Highly emotional and choking back tears she explained that neither herself or her sister, Dolores, (Maseda’s wife) knew where he was currently living.

She insisted that she had not heard from him for months and her sister had been getting regular medical treatment due to her stress levels. “He is a charming man, but he has ruined us,” she concluded.

If this is indeed the case, they will be joining a large and very long line of disgruntled people.

Source: The Olive Press

Banks in Spain, now the country’s biggest property owners having re-possessed so many homes, will have to offer discounts of up to 50% in 2010 if they are to shift their stock of real estate, according to a new report.

Current discounts are simply not big enough to interest buyers, says the report from BNP Paribas Real Estate, the real estate arm of French bank BNP Paribas.

The prediction comes as analysts point out that it could take years for the Spanish property market to recover. According to Acuna & Asociados, highly regarded Madrid real estate analysts, it could take six or seven years just to clear the huge numbers of empty homes that won’t sell.

The firm’s annual report indicates there are 1.67 million properties for sale in Spain including 500,000 new builds, 500,000 resales and the rest are buildings that have yet to be completed.

Indeed, the latest report from BBVA, Spain’s second largest bank, also indicates that a recovery will be slow and drawn out over several years.

It says that Spanish property prices were 30% over-valued but have only fallen 10% so far and they need to fall another 20% before reaching bottom.

It predicts that prices will fall by 7% this year, 8% next year, and 5% in 2012 when they will start to stabilize.

The biggest price falls will be in the coastal areas where the most building has taken place in recent years.

This includes around Madrid and coastal regions such as Malaga, Castellon and Tarragona, the bank says.

They are likely to fall the least in Orense, Navarra and The Balearics

Rising unemployment is hampering a recovery. It is set to rise to 22% next and as more people lose their jobs, more properties come onto the market.

Other experts are also saying that prices have not yet fallen enough.

According to Luis Garicano, Professor of Economics and Strategy at the London School of Economics (LSE), prices are down very little compared with other countries like the US where they have dropped 50% from peak.

The latest Tinsa property price index for November shows that average prices fell by 6.6% over the last 12 months, down from 7.4% last month.

But many in the industry point out that the index does not reflect what is actually happening on the ground as it is based on valuations, not actual transaction prices.

Source: PropertyWire

Three British families had a surprise visit from their "Spanish Santas" when the Guardia Civil called and presented them with demolition orders on their houses last week. Five other homeowners await the same fate. According to the Mayor of Albox, Jose Garcia, eight demolitions were ordered some time ago by the courts and he has a legal obligation to carry them out.
 
Last week Sr. Garcia invited the AUAN, which represents the interests of over 250 households in the area with precarious legal status, to attend a meeting in early January together with the owners of the eight affected properties. He said he would supply a list of addresses and asked us to contact these homeowners in order to prepare them for a visit from the Guardia with the demolition orders. However, the Town Hall failed to supply us with the promised list and the Guardia began notifying people anyway.
 
Two years ago the home of Len and Helen Prior was illegally demolished in front of their eyes in Vera and these pensioners are still living in their former garage without mains water or electricity. They have received no compensation whatsoever.
 
Despite international media outrage at the incident, the authorities still fail to recognise the enormous damage that this scandal has caused to Spain´s reputation both at home and abroad. If Town Halls have granted licences they were not authorised to issue it hardly serves the cause of either justice or good relations to destroy the homes of those who purchased in good faith.
 
The AUAN is co-hosting a candlelight vigil on the 9th January in the ruins of Len and Helen´s home to mark the second anniversary of its destruction. This is an act of solidarity and support for all victims of urban abuse in Spain. We will not stand silently by as more unfortunate families are broken apart and financially ruined through no fault of their own. The authorities must realise that to continue with these actions attracts hostile publicity and is tantamount to economic suicide in this region.
 
Demolition Economics?
 
The Provincial Commission has just approved the re-zoning of 26 hectares of land in Albox for the construction of 400 houses in Santa Cruz. With hundreds of houses in the area standing empty, unsold or uncompleted, why are they approving further construction?
 
Meanwhile the Junta de Andalucia has given its backing to a new business scheme to try to attract foreign buyers back to the province in apparent acknowledgment of the mistrust that exists among potential investors due to bad press. Given that over half of house sales in the province were, until recently, made to UK nationals, further publicity over illegality and demolition tragedies will be extremely difficult to counteract.
 
Demolition Tourism?

Just before Christmas the Albox Department of Tourism and the business and professional association Aepa met in the first of two meetings to discuss the development of tourism in the region. The Mayor of Albox is quoted as saying that local businesses should recognise that tourism could be a good alternative way to make a living and that Albox has all the resources necessary to make this a reality!!!
 
 
If you purchased your home in good faith and have received a demolition notice we ask that you contact us urgently on info@almanzora-au.org  because the mayor has asked that we arrange for the homeowners to meet with him and we are very concerned that some of the legal actions that you or the AUAN can take on your behalf are time critical.
 
You do not need to be an AUAN member to receive any assistance that we can provide.  This issue affects us all.

If you bank in Spain, your bank is probably ripping you off regarding bank charges for transfers. This week, we transferred some money between a Euro bank account in Spain to another Euro bank account in the UK and our bank charged us €63 Euros for the privilege of doing so.

However, a quick phone call later and €62 Euros of that transfer fee had been refunded. Here's how to do the same with your bank.

In September of this year the European Commission passed regulation 924/2009 which states that charges for transactions offered by your bank have to be the same whether the payment is national or cross-border.

In our case, our bank charges €1 for national transfers, yet persists in applying a percentage based charge for international transfers.

We simply had to remind them of this EC regulation, and hey presto, we had been refunded.

If your bank is less willing to cooperate, you can dob them in to the Spanish national authority and make a formal complaint by emailing The Bank of Spain.

If that fails, you can also and ask the Bank of Spain to mediate a resolution to the problem.

More information about EC Regulation 924/2009 can be found at the European Commission website and Wikipedia.

Spain's banks have a long history of dodgy charges - especially to foreign clients. Now the EC has actually done something useful to bring those practices to light and, hopefully, stop them.

In the news this week, the EU Sets Deadlines for Deficit Countries. Spain has been given until 2013 to sort out its public deficit and bring it back from around 11% currently to the EU maximum of 3%.

Is Spain doing enough to make that happen? Ratings company, Standard & Poor's doesn't think so.

This week it lowered Spain's rating from 'stable' to 'negative' and said the country will experience a more pronounced and persistent deterioration in its budget and a more prolonged period of economic weakness, than it expected at the start of the year.

As reported last week, the Spanish government plans to raise value-added tax, income tax and capital gains tax in 2010 - even though the economy is projected to continue to shrink. Tough times ahead for Spain's economists - much as in Ireland and the UK, not to mention Greece, Portugal & Italy.

Regarding Spanish property prices, TINSA released their November figures this week. Again, be cautious about the upswing in the first of their graphs. Although the trend of the line makes for a smiley face, the reality is that house prices in Spain are still dropping - although not as rapidly as before.

On the plus side, a few more months of this kind of trend should see the true bottom of the market - and perhaps even a little bit of price increases as seems to be happening in the UK currently.

Nick Snelling has another excellent article this week about The Complexities of the Spanish Property Market.

Nick says: "For a foreign buyer to look upon the Spanish property market as a lethal area to avoid, at all costs, would be a mistake. The truth is that the Spanish property market has many different parts to it. It is far from being a one-dimensional market and still offers value for money to the careful buyer."

The Spanish property market is certainly in crisis - but this does not mean that the entire Spanish property market is defective. Some sectors will always have long term desirability and be sound investments. Just be sure that you buy into a sector which has assured value and that you are not seduced by attractively-priced properties in the wrong sector.

In Spanish Property Prices Walking the Talk, Mark Stucklin indicates that some of the price reductions from Banks and Developers might not be all that they appear to be.

As I mentioned last week, the banks have largely failed to bring genuinely discounted property to the market, and instead some developers are now making key-ready properties available to short-circuit the banks completely.

There seems to be a lot going on in the Spanish economy and its property market at the moment and, overall, I agree with Mark's conclusion: "All will change in 2010, one way or another."

Martin Dell, Kyero.com
 

Property sales in Spain have plummeted from over a million in 2006 to 400,000 at the end of the third quarter of this year, according to the latest published figures.

Spain’s real estate register shows that there were just 110,709 transactions in the third quarter of 2009, down 15% compared to same period last year, with coastal properties suffering the most.

But the figures also show that the decline could be starting to level out as the number of transactions in the third quarter was slightly above those of the second quarter which were 100,850.
It marks the first time that sales have risen on a quarterly basis for 13 quarters.
But it is too early to say that the sales crash is coming to an end.
‘In terms of transactions the market has shrunk by around 60% but the number of homes on the market has just kept growing, meaning there is a growing number of vendors chasing a dwindling number of buyers,’ said Spanish property expert Mark Stucklin.

‘We will need at least a couple more quarters of data to confirm if there is a trend towards increasing home sales.
Common sense suggests that means more power to the buyers, who will be pushing for lower prices,’ he added.

The figures also show a larger than average fall in the sale of holiday homes.
Sales over 12 months were down 43% in the Costa Dorada, 37% in the Costa de la Luz, 36% in the Costa Blanca, 36% in the Balearics, 35% in Tenerife, 32% in the Costa Brava, and 31% in Barcelona.

‘Formerly middle class holiday homes have been become luxury items, out of reach for most households,’ said Alfredo Martínez, provincial boss of the Association of Bank Users’ consumer group.
Sales of holiday homes are down 80% according to Cayetano Rengel, head of Malaga’s estate agents’ association.
‘The problem is the supply of property has grown so much that competition is brutal, on top of which the banks have turned off credit,’ he explained.

One of the big problems is the exodus of British vendors and buyers, who have been driven out by the fall in the Sterling.
‘They have lost 40% of their purchasing power and now living in Spain does not make sense for many of them,’ said José Prado, president of the Association of Constructors and Promoters (ACP).

Source: PropertyWire.com

British property investors who bought overseas four years ago in real estate hot spots could make significant gains if they sell up now, it is claimed.

Research from Close Treasury, a division of merchant bank Close Brothers, indicates that if they bought without a mortgage, current exchange rates means that despite the global property crash they are sitting on a good profit.

In a report it says that those who bought in Italy and Spain are among the winners. 'When British investors calculate the value of an overseas property they bought a few years ago, they not only need to look at how real estate prices have changed, but also what has happened to the exchange rate between Sterling and the local currency,' explained Mark Taylor, head of foreign exchange at Close Treasury.

'Even though overseas property prices tend to have fallen in the last year, in many cases the fall in the value of Sterling will have offset this, and many people may still have seen the value of their homes increase in Sterling terms,' he added.

The report shows that an Italian property bought in Euros in June 2005 would have seen the Sterling value of the property increase by around 65%, four years later. The calculation includes a 30% rise in property prices over that period, supported by the 27% increase in the value of the Euro compared to Sterling, over the same period.

In another example, those who invested in property in Spain in June 2005 will have seen the Sterling value of their investment increase by 59% four years later, due to a combination of rising property prices and a fall in the value of Sterling against the Euro.

Foreign Currency Direct has made a similar point, reporting that some Britons are actually choosing to sell up and make a profit by taking advantage of a weaker pound. The currency exchange specialist said it had seen a significant increase in the number of British clients selling property abroad and transferring their receipts back to the UK.

Source: PropertyCommunity.com

Juan Cano Giménez, 52, the current mayor of Polop de la Marina, is suspected of hiring two hitman to kill his party rival after they clashed over policy, and is being held in prison to await trial.

Alejandro Ponsoda, 55, was shot at close range by two gunmen as he arrived home on the evening of October 19, 2007.

After hearing what he thought was fireworks, a neighbour found the victim slumped in the seat of his car with bullet wounds to his head and neck. He fell into a coma and died from his injuries eight days later.

Police said he had been shot three times from two different weapons in a "mafia style execution" that they believed was the work of professional killers.

Mr Ponsoda had been mayor of the town just north of the popular holiday resort of Benidorm on Spain's southeastern Mediterranean coast for 12 years, and was known to have openly opposed plans to allow a new development comprising 5,000 new houses on the outskirts of the municipality.

The town, which has a population of 3,600 residents, is popular with holidaymakers and many British expatriates have homes there.

The murder shocked the local community and made headlines across Spain but despite an intense investigation police were initially forced to admit they had few leads.

Mr Giménez, from the same conservative Popular Party, had been pictured shedding tears at his predecessor's funeral and he promised to dedicate a new school to the late mayor's memory.

It was not until earlier this month that investigators had a breakthrough in the case when an unrelated surveillance operation provided a surprising link to the case.

Police investigating a local nightclub they believed was operating as a brothel stumbled across evidence allegedly connecting it to Mr Ponsoda's murder.

Several men, including the owner of the club, were brought in for questioning on suspicion that the premises had been used to plan the crime. Police arrested two men from the Czech Republic, one of whom worked as a doorman at the club, on suspicion of carrying out the assassination.

And in a twist, police raided the home of the new mayor and arrested him for allegedly plotting the murder. Another two men – a man with a previous record for drug trafficking, and the owner of a local shoe shop – have also been detained in connection with the killing.

Police believe they may have conspired to murder the mayor after he refused to give planning permission to a real estate deal that they were each allegedly set to profit from.

In total seven people have appeared before a judge and been remanded into custody without bail to await trial