Spain Sliding Down The Pan

[Neverland]

Spain have a huge huge problem here although I don't think its as straightfoward as saying 1600000 available properties (overbuilt) only 200,000 annual demand. I suspect a lot of the overbuild is in the touristy areas and revloves around little flats etc..... so its likely that the overbuilt locations ( and thats not ALL tourist destinations) will have big big trouble for years to come, but prices in other parts of spain may not be so soft.

Either way the country has some serious problems as effectively they have lost 18% of their industry ( thats what construction used to be) have something like 12% unemployment (rising to 20% wouldn't surprise me) and their banks like it or not will have a large number of bad loans as a result... plus they have zero room for manoevre due to the euro.

Remeber Ireland is in a similar hole with an Overbuild (unoccupied/unfinished ) property bank equivalent to their ENTIRE rented sector.

Compared to these two the UK property issues are miniscule.

The facts that:

- sterling has depreciated 20-25% against the Euro and 15-20% against the USD;

- most the large listed commercial property REITS conducted rescue rights issues this summer and a number of their private competitors have gone or close to going bust; and

- UK commercial property has declined about 40% from peak values

would indicate that the international investment community disagrees with you

Edited September 25, 2009 by Neverland

[Traktion]

38% youth unemployment already too... that is a HUGE number by anyone's measures!

How long before they start rioting? When the benefits stop? If things get worse, I wouldn't be surprised if there was a whiff of revolution in the air.

This crisis has barely started... the big hit (global financial failure) was deflected, but the same problems persist. Will another country failing start the scramble for the exits again? With all the money spent to stop the last one, what would be done to stop the next one?

[Traktion]

Mmmm... not convinced about that last comment.

Just because we're not an obvious basket case at this stage does not mean we have huge problems. I think we do.

Yup, we have borrowed cheaply from the future by QE, propped up the banks, but the huge debt levels remain.

There was a post yesterday about the required £500bn reduction in lending within 4 years - that's over 40% of the £1.2tr or so UK market. QE stopped a rapid 40% retraction, but retract it still must.

[LiveAndLetBuy]

The usual "it is different here" point of view.

The bloodbath will be everywhere. SEll and rent while you can.

So you're saying that property built on a beautiful island with strict planning controls, limited space, and popular with those who have serious money won't hold its value better than property built by corrupt speculators, without any planning permission and located right next to ugly blocks of similar properties built by yet more corrupt speculators, without any planning permission. Hmmmm.

[Deckard]

It we be interesting to see whose debt is preferred. The UK, with its quantitive easing or Spains.

http://www.bondsonline.com/Todays_Market/G...amp;country2=EN

Spanish bonds currently pay a higher yield

[We're all dooomed!!!]

The usual "it is different here" point of view.

The bloodbath will be everywhere. SEll and rent while you can.

I don't need or want to sell, the small mortgage I had is now paid off. I agree if 'financial armageddon' strikes Spain, everywhere will fall (- maybe I'm missing a trick by not selling now and buying back later do you think?) Frankly a huge crash in prices all over Spain is not a done deal.

Each area has to be taken on its merits - looked at property on the Costa Blanca before buying on Majorca and knew that it was a bad investment, as well as somewhere I wouldn't want to spend leisure time. Skyscraper apartments, development as far as the eye could see, not enough local infrastructure - fine if you want to spend your life/holidays on a building site. The islands are very different. I didn't buy to make enormous profit so if prices fall 15% I can handle that - I bought for the lifestyle. If prices fall 15% on the Balearics you can guarntee the fall on the mainland will be at least double (as I personally hope it will be in the UK!!).

[CokeSnortingTory]

So you're saying that property built on a beautiful island with strict planning controls, limited space, and popular with those who have serious money won't hold its value better than property built by corrupt speculators, without any planning permission and located right next to ugly blocks of similar properties built by yet more corrupt speculators, without any planning permission. Hmmmm.

It depends on whether the biggest problem going forwards will be oversupply or lack of demand.

I tend to suspect it will be the latter. If the Spanish are going to rely on French and German savers they may be disappointed - their savings may be eaten by unemployment.

[We're all dooomed!!!]

I have a friend who has a apartment in a high rise development in Majorca, it's halved in value, he can not sell it. It was worth 190k but best he ever had was an offer at 90K quickly reduced to 70k.

I should know the answer myself, but I am moving probably to Lanzarote but possibly another canary Island, I need some advice please.

What do people think prices will do there? (years and % of going down)

Which are the very nicest Islands and why?

I can't do cold at all nor hills (very damaged heart and strokes)

I don't want a place where it's infested with chavs or find some pissed yob wearing a 'kiss me quick' hat is going to throw up on my door step whilst shagging some slapper he has just pulled in a club.

Can I ask two questions :-

i) Is it a very old apartment? Building regulations no longer allow high rise in Majorca and it's been that way for quite a while.

ii) Is it in Magaluf or near? Hate to be snobbish but this could go some way to explaining a fall that big. Could be the same if its in 'the German Magaluf' El Arenal as well.....

Personally I think anywhere on Majorca away from the lager louts corner is hard to beat. Weather in winter is not hot but rarely exceptinally cold and lots of winter days sort of like Spring in UK. Wherever you go, spend at least one holiday there first though - biggest mistake is buying without knowing the area. As for prices there's no pressure to buy straight away - I reckon prices in Balearics will be fairly static or will fall slightly.

[abharrisson]

The facts that:

- sterling has depreciated 20-25% against the Euro and 15-20% against the USD;

- most the large listed commercial property REITS conducted rescue rights issues this summer and a number of their private competitors have gone or close to going bust; and

- UK commercial property has declined about 40% from peak values

would indicate that the international investment community disagrees with you

Actually it doesn't ... if you knew anything about the subject you'd know that the "international investment community" (morons that they are) drove commercial property up to ridiculous levels ... hence the 40% fall now.... commercial property is to some degree and in this particular instance certainly a different case from residential ( and even less to do with the overbuilding of residential property in Spain and Irleland that I was referring to if you'd had the basic intelligence to read it)

regardless though your point as regards commercial property is very poorly made.... maybe you are part of the "international investment community" who seemed to think commercial property at a 2.5%-3% yield looked like jolly good value in 2006/2007.

[We're all dooomed!!!]

I have a friend who has a apartment in a high rise development in Majorca, it's halved in value, he can not sell it. It was worth 190k but best he ever had was an offer at 90K quickly reduced to 70k.

I should know the answer myself, but I am moving probably to Lanzarote but possibly another canary Island, I need some advice please.

What do people think prices will do there? (years and % of going down)

Which are the very nicest Islands and why?

I can't do cold at all nor hills (very damaged heart and strokes)

I don't want a place where it's infested with chavs or find some pissed yob wearing a 'kiss me quick' hat is going to throw up on my door step whilst shagging some slapper he has just pulled in a club.

Sorry, misread your post. See you are going to Canaries. Don't know much about prices in Canaries. If you don't like mountains/hills then I thought Tenerife / Gran Canaria were both pretty mountanous in places when I was there though.

[Neverland]

Actually it doesn't ... if you knew anything about the subject you'd know that the "international investment community" (morons that they are) drove commercial property up to ridiculous levels ... hence the 40% fall now.... commercial property is to some degree and in this particular instance certainly a different case from residential ( and even less to do with the overbuilding of residential property in Spain and Irleland that I was referring to if you'd had the basic intelligence to read it)

regardless though your point as regards commercial property is very poorly made.... maybe you are part of the "international investment community" who seemed to think commercial property at a 2.5%-3% yield looked like jolly good value in 2006/2007.

Your point about the UK's "better position" is spurious because:

- Spain, Ireland and Portugal are doing their value destruction in public as they are in the Euro

- We are doing our value destruction largely in private as GBP has been allowed to slide against the Euro (our biggest trading and investment partner)

Friends in Ireland are seeing their wages cut nominally for sure but, effectively, all UK wages are cut by 25% in Euro terms last year through currency depreciation

If you are a Euro investor your UK commercial property investments have gone down 55% this year (25% from currency and 40% in sterling terms)

This concerns me because the UK market is very dependent on overseas investors in both property and government debt investment

We currently look in a better position than the PIIGs, but its not entirely clear to me that we really are

[On the point about residential over-building - the UK has a huge oversupply of inner-city flats (outside London)]

Edited September 25, 2009 by Neverland

[Tim Miller]

Can I ask two questions :-

i) Is it a very old apartment? Building regulations no longer allow high rise in Majorca and it's been that way for quite a while.

ii) Is it in Magaluf or near? Hate to be snobbish but this could go some way to explaining a fall that big. Could be the same if its in 'the German Magaluf' El Arenal as well.....

Personally I think anywhere on Majorca away from the lager louts corner is hard to beat. Weather in winter is not hot but rarely exceptinally cold and lots of winter days sort of like Spring in UK. Wherever you go, spend at least one holiday there first though - biggest mistake is buying without knowing the area. As for prices there's no pressure to buy straight away - I reckon prices in Balearics will be fairly static or will fall slightly.

I can't tell you how old or where it was, he just showed me a picture of it whilst telling me how terrible the market was.

I am looking at the Canary's, do you know anything about those islands? I am liking what I hear about Lanzarote, not so much tourism and no high rise. I was in Malaga in December to see a mate of mine, I have been before, far too built up for me and grey, I don't do grey nowadays. Any help on the Canary's would be a great help. I will be more than happy with no extreme differences in temperatures between winter and summer, I'm living in the Caribbean as is, I just need better hospitals than here.

[Tim Miller]

Sorry, misread your post. See you are going to Canaries. Don't know much about prices in Canaries. If you don't like mountains/hills then I thought Tenerife / Gran Canaria were both pretty mountanous in places when I was there though.

Cheers, I just found your additional reply. I have carefully looked at prices, the wonders of the Internet! It's the thoughts of people who have been there that interests me. I really do not want high rise and all tourists, God knows some brits are a pure embarrassment. I want up market if I can get it. Quality is all important as well, I am lucky as I don't have to work, I want things to do in the day with nice people. As I say, Lanzarote is drawing me.

[abharrisson]

Your point about the UK's "better position" is spurious because:

- Spain and Portugal are doing their value destruction in public as they are in the Euro

- We are doing our value destruction largely in private as GBP has been allowed to slide against the Euro (our biggest trading and investment partner)

Friends in Ireland are seeing their wages cut nominally for sure but, effectively, all UK wages are cut by 25% in Euro terms last year through currency depreciation

If you are a Euro investor your UK commercial investments have gone down 55% this year (25% from currency and 40% in sterling terms)

This concerns me because the UK market is very dependent on overseas investors in both property and government debt investment

We currently look in a better position than the PIIGs, but its not entirely clear to me that we really are

[On the point about residential over-building - the UK has a huge oversupply of inner-city flats (outside London)]

I can only guage from your response that I suspect you are part of the moronic internation investment community whose views you seem to value so highly... go back and read the thread and I think you'll see where you went wrong.

In simple terms ( so that you can grasp it) the point being made was that Spain has an overbuild problem of 1.6m units vs annual demand of around 200,000... ireland has an overbuild problem the equivalent of their entire rented sector ( I think something like 600,000 units)... the point being made was the Uk's problem is no where near that degree... two posts later you have miraculously come up with a statement about overbuilding of 2 bed city centre flats which every monkey and their uncle knows about... whats that supposed to prove in this discussion about overbuilding you have stumbled into...... do you think the Uk's overbuiliding problem is worse ??? ..... I suggest you slink back to your hole and come back when you have something useful to contribute.

[Neverland]

I can only guage from your response that I suspect you are part of the moronic internation investment community whose views you seem to value so highly... go back and read the thread and I think you'll see where you went wrong.

In simple terms ( so that you can grasp it) the point being made was that Spain has an overbuild problem of 1.6m units vs annual demand of around 200,000... ireland has an overbuild problem the equivalent of their entire rented sector ( I think something like 600,000 units)... the point being made was the Uk's problem is no where near that degree... two posts later you have miraculously come up with a statement about overbuilding of 2 bed city centre flats which every monkey and their uncle knows about... whats that supposed to prove in this discussion about overbuilding you have stumbled into...... do you think the Uk's overbuiliding problem is worse ??? ..... I suggest you slink back to your hole and come back when you have something useful to contribute.

Congratulations you are the world's expert on 2 bedroom flats

The more interesting question is whether its better:

- to have floating currency and be able to devalue

- to have a fixed currency and have to sort your economy out

I think its interesting and the answer is being played out in the next ten years

You will too when you can only afford to go camping in France for a week for your summer holiday

[We're all dooomed!!!]

I can't tell you how old or where it was, he just showed me a picture of it whilst telling me how terrible the market was.

I am looking at the Canary's, do you know anything about those islands? I am liking what I hear about Lanzarote, not so much tourism and no high rise. I was in Malaga in December to see a mate of mine, I have been before, far too built up for me and grey, I don't do grey nowadays. Any help on the Canary's would be a great help. I will be more than happy with no extreme differences in temperatures between winter and summer, I'm living in the Caribbean as is, I just need better hospitals than here.

No experience of Lanzarote I'm afraid. Gran Canaria I didn't like - resorts were like concrete jungles and desert-like between them. Tenerife was nicer in my opinion (as long as stay away from Playa de las Americas). Inland it is very mountainous and quite spectacular. I've heard the north of island is nice although it rains a lot more. All very personal opinons though - you'd have to go there and see what you think.

[@contradevian]

Crap low quality builds that will be damp and decaying in 10 years. Incomplete communities so no maintenance being done, reducing the possibility of sales on those communities further. Many with illegal licences and at risk of being demolished. High taxes and little chance of covering costs with rental income. Soviet style concrete over-developments.

If you see a buying bargain there, you may be better off putting your cash into a big pile and setting fire to it.

If they were cheap enough and only lasted 10 years I'd be tempted to buy something.

[Guest P-Diddly]

Cheers, I just found your additional reply. I have carefully looked at prices, the wonders of the Internet! It's the thoughts of people who have been there that interests me. I really do not want high rise and all tourists, God knows some brits are a pure embarrassment. I want up market if I can get it. Quality is all important as well, I am lucky as I don't have to work, I want things to do in the day with nice people. As I say, Lanzarote is drawing me.

Tim,

Corsica . . . don't know if you can buy there or not.

[rondy]

I don't need or want to sell, the small mortgage I had is now paid off. I agree if 'financial armageddon' strikes Spain, everywhere will fall (- maybe I'm missing a trick by not selling now and buying back later do you think?) Frankly a huge crash in prices all over Spain is not a done deal.

Each area has to be taken on its merits - looked at property on the Costa Blanca before buying on Majorca and knew that it was a bad investment, as well as somewhere I wouldn't want to spend leisure time. Skyscraper apartments, development as far as the eye could see, not enough local infrastructure - fine if you want to spend your life/holidays on a building site. The islands are very different. I didn't buy to make enormous profit so if prices fall 15% I can handle that - I bought for the lifestyle. If prices fall 15% on the Balearics you can guarntee the fall on the mainland will be at least double (as I personally hope it will be in the UK!!).

We all know Costa Blanca , especially South from Alicante, is mainly a bad area and the Brits enclaves there are going to be inhabited.

But Majorca also has a big glut of properties so the prices are going to fall there too.

Formenterea might be the only safe place, as they did not have time to transform it into rubbish.

[rondy]

So you're saying that property built on a beautiful island with strict planning controls, limited space, and popular with those who have serious money won't hold its value better than property built by corrupt speculators, without any planning permission and located right next to ugly blocks of similar properties built by yet more corrupt speculators, without any planning permission. Hmmmm.

Look at fotocasa.com and you will see a huge number of properties on Majorca.

Maybe Menorca could do better, definitely Formentera will do better.

[rondy]

What do people think prices will do there? (years and % of going down)

Which are the very nicest Islands and why?

I can't do cold at all nor hills (very damaged heart and strokes)

I don't want a place where it's infested with chavs or find some pissed yob wearing a 'kiss me quick' hat is going to throw up on my door step whilst shagging some slapper he has just pulled in a club.

You should go visit. You can find £50 airfares to any Canary island by Easyjet.

You should see them all and decide which one is the nicest for you. I prefer Tenerife and my wife hates it. She like Fuerteventura which I find acceptable.

There are chavs everywhere, try to find areas like Costa Calma in Fuerteventura with bigger German retired populaiton, they tend to behave less chavy.

About hospitals, probably the best bet is Tenerife, I do not think there is any good hospital in Fuerteventura or Lanzarote.

Edited September 25, 2009 by rondy

[abharrisson]

Congratulations you are the world's expert on 2 bedroom flats

The more interesting question is whether its better:

- to have floating currency and be able to devalue

- to have a fixed currency and have to sort your economy out

I think its interesting and the answer is being played out in the next ten years

You will too when you can only afford to go camping in France for a week for your summer holiday

I see so you don't want to admit you were wrong is that it ?

The options you propose on the currency debate (which is an entirely different matter) are simplistic to say the least but then I'd expect nothing more from you on the basis of the quality of what you have put forward so far.

You seem to think you know me... you don't... if you did you'd know as I have a family house in france the scenario you put forward is pointless.... made me laugh .

[Neverland]

I see so you don't want to admit you were wrong is that it ?

The options you propose on the currency debate (which is an entirely different matter) are simplistic to say the least but then I'd expect nothing more from you on the basis of the quality of what you have put forward so far.

You seem to think you know me... you don't... if you did you'd know as I have a family house in france the scenario you put forward is pointless.... made me laugh .

Nope, you have my back up because of your continual pomposity

Since your genius output in the past seems to have been to agree with my hypotheses or present them as your own thoughts I will be charging you royalties from now on

You will clearly be able to afford it

[abharrisson]

Nope, you have my back up because of your continual pomposity

Since your genius output in the past seems to have been to agree with my hypotheses or present them as your own thoughts I will be charging you royalties from now on

You will clearly be able to afford it

My pomposity... no theres a laugh.. I make a simple comment you dive in , I prove you wrong... you don't have the guts to admit it and get huffy..... I think you'll find thats what has happened... as I said time to crawl back to your hole..... as for your middle comment, if you have ever made a sensible comment I might well have agreed with it, but I certainly wouldn't have dressed it up as my own... don't judge others by your own pathetic standards.

[Neverland]

My pomposity... no theres a laugh.. I make a simple comment you dive in , I prove you wrong... you don't have the guts to admit it and get huffy..... I think you'll find thats what has happened... as I said time to crawl back to your hole..... as for your middle comment, if you have ever made a sensible comment I might well have agreed with it, but I certainly wouldn't have dressed it up as my own... don't judge others by your own pathetic standards.

I'll let you get the last word as its obviously so important to you