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Spain Real Estate News

What's really happening in the real estate world in Spain? The EOS Team are going to be keeping you up to date with everything that's happening from a market perspective.

British expat becomes 'accidental' mayor in Costa Blanca
31 October 2008

Mark Lewis

Mark Lewis, 58, has been left in charge of the town hall in San Fulgencio after the mayor, deputy mayor and four senior councillors were all taken into police custody following allegations of real estate corruption.

Mr Lewis, who lives in Spain with his wife and daughter, was given the title by default on Wednesday on the grounds that he is one of only two councillors from the ruling coalition not to be arrested.

"Mr Lewis has taken charge of the council on the grounds that he is the fourth deputy mayor. Everyone above him in the pecking order has been arrested," the source added.

"Everything is in a state of chaos since these arrests and we are left with someone who speaks only a few words of Spanish," said a source at the town hall.

Mr Lewis refused to comment on his new position except to say: "It's only temporary I hope. I'm sure this will all be sorted out very quickly and everything will return to normal."

The town hall was thrown into disarray when deputy mayor Manuel Barrera Garcia, 61, was detained by the National Police on October 20 after a video showed him allegedly accepting a 5000 Euro bribe from a property developer.

Socialist mayor Trinidad Martinez, and councillors Juan Antonio Gamuz, Juan Antonio Gonzalez Palenca, Mariano Marti and Fina Reme were arrested on Wednesday lunchtime as the corruption probe widened.

Police raided the town hall and seized documents, in a move that mirrors the investigation into the Marbella scandal of March 2006 when the entire planning committee were arrested.

Mr Barrera was allegedly caught on camera saying: "It's better if you give me big bills, they take up less space".

He denies any wrongdoing and claims he was set up by political rivals.

"I am completely innocent. The video was manipulated to make it look like I accepted a bribe," he said after being released on bail.

The Spanish government have vowed to clamp down on corruption by town officials and rid the nation of its reputation for underhand dealings.

Earlier in the week two other mayors from the Valencia region, Socialist Jose Joaquin Moya from Bigastro and Juan Jose Rubio, an independent from Zarra, were arrested on real estate corruption charges.

Local police chief Bernardo Cortijo and the town hall's lawyer Juan Antonio Ramos Calabria have also been detained.

Until his promotion to the top position Mr Lewis, who is thought to have lived in Spain for more than 20 years, held the title of Councillor for Animals, a role which included organising searches for lost pets and monitoring the local animal rescue centre.

He was elected along with another British councillor, Mick Blake, in May 2007 after campaigning on an anti-corruption ticket with the independent AIM party in a bid to improve the representation of the large expatriate community of San Fulgencio.

The town, 25 miles from Alicante in south-eastern Spain, has a population of 11,000, some 80 percent of which are foreigners. The vast majority of those are British who live in a part of town dubbed the "English ghetto" by locals who complain that little effort is made by many of the expatriates to adopt the local culture and learn Spanish.

English style pubs in the area serve British beer and all day breakfasts.


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Spanish restaurant launches 'anti-crisis' lunch menu for one euro
29 October 2008

A restaurant in Gijon in northern Spain has started offering a lunch time "anti-crisis" menu for just one euro to help its customers in the industrial port face up to the sharp economic slowdown.

"We don't make money but we are not losing money either," one of the managers of Dario's restaurant, Emilia Jimenez, told Spanish media, adding that business on weekends makes up for its budget-priced Thursday lunches.

The restaurant launched the offer earlier this month to try to attract customers at a time when consumer spending is contracting sharply in Spain, which is going through an abrupt economic slowdown.

Waiting times for a seat were long on Thursday as the 49-seat establishment served nearly 200 people.

For one euro (1.26 dollars) customers were served seafood soup, ribs with rice, chicken or anchovies with salad, along with bread, a drink and dessert.

Lunch time menus in Spain usually cost around 10 euros.

Spain is experiencing a rapid rise in unemployment as its economy, which just last year was one of the fastest-growing in the developed world, lurches towards a recession due to the end of a decade-long property boom.

The country's unemployment rate rose to 11.3 percent in the third quarter, its highest level in more than four years and the highest rate in the 27-member European Union, from 10.4 percent in the second quarter.

The Washington-based International Monetary Fund predicts Spain's unemployment rate will hit 14.7 percent next year while the economy will shrink by 0.2 percent that year. Spain's economy expanded by 3.7 percent last year.

Source: Timesoftheinternet

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It's all getting so depressing - Video
21 October 2008

It was all getting too much...

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Spanish property problems deepen
19 October 2008

Spanish holiday homeowners are about to feel further pain as the country's weaker banks struggle and property prices and demand continue to fall.

The collapse in the Spanish property market is expected to leave more than 900,000 new homes unsold this year and Spain's prime minister Jose Luis Rodriguez Zapatero warned this week the nation's banks will not escape unscathed.

While Spain's giant banks Santander and BBVA have managed to ride the current financial storm, the nation's smaller banks and savings and loans institutions cajas are struggling to remain afloat.

Meanwhile, there is a shortage of new UK buyers, as many prospective owners struggle to raise funds with a banking squeeze in UK and Spain and the falling pound raising mortgage and property costs.

Prime minister Zapatero warned the cajas were facing mergers or takeovers this week, according to the Financial Times, as their bad debts from residential property lending rise – a scenario likely to lead to a further tightening in the property market.

The cajas are heavily involved in Spain's property industry, lending both to developers and to mortgage borrowers.

The warning came as Spanish property valuations firm Tinsa said that Spain's number of unsold homes was likely to hit 920,000 this year, with holiday hotspots hit hard.

Tinsa said that house prices fell by 4.9% annually in September, decreasing for the seventh consecutive month. This information contradicted Spanish Housing Ministry figures which said prices fell by 1.3% in the third quarter of 2008 to leave them up 0.3% on September 2007.

However, experts consider that both figures underestimate the decline in property values in many popular areas, with the Costas having large numbers of unsold and unfinished developments.

British owners of Spanish property have been relatively insulated from price falls by the 15% fall of the pound against the euro over the past year, making their Spanish home worth more in terms of sterling.

However, those who have taken out sterling mortgages in the UK to pay for their properties or are having to exchange their sterling earnings into euros to pay Spanish mortgage bills have seen repayment costs rise substantially.

Meanwhile, falling house prices in the UK and a right mortgage market have seen a dramatic reduction in equity being released from UK properties according to the Bank of England and a far lower level of demand for overseas property.

Although the Spanish property market is undergoing a correction, overseas property experts predict that a flight to quality will mean that it should remain top of the pile for British holiday homebuyers.

Conti Financial Services, an overseas mortgage specialist, says that Spain still remains the number one destination with 15% of its enquiries coming for the traditional favourite, down 2% on last year, ahead of France (14%) and Turkey (11%).

The broker said that Spain's long-established market will provide long-term growth and remained popular as a lifestyle option for expats and holiday destination with sustained rental demand.

Simon Conn, of Conti, said: ' Spain and France are still leading the pack, albeit with a narrowing margin, and it's not difficult to see why. Affordable prices, low interest rates, easy access and great weather have all contributed to the attraction of these destinations, but their lead is being weakened as investors turn to emerging markets. The strong euro has also taken its toll.'


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Crunch time in Spain
16 October 2008

As far as reputations go, Gordon Brown is not the only one who has managed to look good in the face of the global economic meltdown. Spain and its socialist government have looked confident and decisive in response to the crisis.

Unflappable Pedro Solbes, the finance minister, resisted the kneejerk unilateralism of Ireland's blanket guarantee of savers' deposits, arguing early on that Europe needed to adopt a coordinated response to the world's credit crunch. However, when initial attempts to thrash out a European consensus failed, Spain was quick to unveil a national strategy.

Next Monday, a special parliamentary session will be held to approve the government's measures: to offer bank guarantees for new debt of up to €100bn this year (and the government has already indicated it is likely to make available around the same amount next year) and to set up a fund of up to €50bn to buy assets from banks in order to keep credit flowing to the economy.

Spain's main opposition party, the conservative Partido Popular (PP), is broadly in favour of the measures, which is unsurprising as they are similar to those being introduced by other European countries and followed a meeting of José Luis Rodríguez Zapatero,the prime minister, with some of the country's largest bankers, including those from Santander and BBVA.

But it's high time to focus on the nitty-gritty of the plan. "The conditions which the economy ministry is going to establish so that banks can benefit from this guarantee are still unknown," points out Wednesday's business daily La Gaceta de los Negocios.

The Spanish taxpayer has a right to know what kind of assets the government will buy with the emergency fund, how the process will be run, their interests protected and whether the funding will reach "the real economy" – including families and small businesses hit by tighter lending and the increase in the Euribor.

The government has said the fund will be used only to buy "high quality assets at their real value" and that eventually it will stimulate the market, so that it does not cost the taxpayer a cent. Critics have viewed these assurances with scepticism. "Why are we going to give banks this large sum of money without asking what they are going to do with it, as Solbes proposed we do on Friday?", wrote Santiago González in right-of-centre El Mundo. "Let's apply the same lack of trust which they apply to us when they gave us loans."

The largest Spanish trade union, the CCOO, made its own proposition to ensure the country's borrowers reap some of the benefits of the bank guarantees – it proposes banks which get public aid be obliged to cut their interest rates on mortgages (on average 5.477% in October) to the ECB's lending interest rate, which is currently 3.75%.

Whether accepted or not, the proposal is a reminder that beyond the liquidity squeeze facing banks, the Spanish economy faces a home-grown crisis of its own. While Spanish banks have boasted they are not saddled with fancy derivatives of dubious value, many face rising defaults on mortgages and consumer loans issued at the height of Spain's decade-long building boom and have to compete for business in a less dynamic economy.

History will ultimately rate this government on its ability to implement some painful and unpopular economic restructuring, to drive up productivity and create wealth and jobs beyond the empty houses which litter Spain's coasts and many of its cities.

Source:  Gaurdian

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Spain: housing slump drags on
16 October 2008

House prices in Spain have fallen for a second straight quarter, the government said Wednesday, offering more bad news for the real estate sector which fueled a decade of economic growth but has now gone flat.

The Housing Ministry said prices fell 1.3 percent in the third quarter of this year compared to the second quarter. That means home prices are now only 0.4 percent higher than they were in September of 2007.

A London-based economic research organization said the situation is actually much worse, with price declines of 30 percent likely.

The ministry said that, in quarterly terms, prices fell in all but two of Spain's 17 regions.

On a yearly basis, prices did rise in some areas, such as Catalonia and the Balearic islands, where many Germans and other Europeans own vacation property.

But they fell 3.7 percent in the metropolitan Madrid region, for instance, the ministry's director of housing policy, Anunciacion Romero, told reporters.

The Spanish construction and property industries have been hit hard by a sharp rise in interest rates on adjustable-rate mortgages, which the vast majority of Spanish homeowners have. They are also suffering due to tighter lending policies at banks spooked by the sub-prime crisis in the United States and the broader international credit crunch.

The housing collapse has been devastating for the economy because construction and related industries account for up to 20 percent of Spanish GDP.

After growing 3.8 percent last year, the Spanish economy is now expected to expand just over 1 percent in 2008. The IMF predicts Spain will go into recession next year.

Capital Economics, an economic research consultancy in London, said Wednesday that Spanish housing prices will fall by around one-third over the next few years and push the economy into a prolonged recession.

It said that, with unemployment at an EU-high of 11.3 percent and consumer confidence low, only sharp declines in housing prices will lure people back onto the market.

Furthermore, Bank of Spain data suggests banks here are continuing to tighten the supply of mortgages, and a glut of unsold houses — some estimates say there could be as many as 1 million by the end of the year — "could ultimately force struggling property developers into a fire sale of unsold properties to balance their books."

Source:  IHT

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Desperate Spanish developer makes two-for-one house offer
11 October 2008

A Spanish property developer is giving away two homes for the price of one in a bid to find takers on the collapsed market.

With up to 24,000 new or nearly built homes empty along the Costa del Sol, according to El Pais newspaper, the developer is giving away a one bedroom apartment with every 780,000 euros (1.1 million dollar) townhouse it sells.

The four-bedroom town-houses are located near the beach in Terrazas de Miraflores in Andalusia province.

"Buy a town-house in Terrazas de Miraflores and get another one-room apartment in Baviera Golf," the Salsa Immobiliaria company says on its website below a photo of the town-houses surrounding a swimming pool.

The developer launched the offer Thursday on the first day of a real estate fair Malaga.

After about a decade of booming activity, Spain's property sector collapsed last year amid rising interest rates, oversupply and tougher lending conditions.

The number of house building permits issued by Spain during the first seven months of 2008 plunged by 58 percent from the same time last year to 188,046, public works ministry data show.

Source:  Google

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Tenerife village demolished under coastal law
09 October 2008

Residents of Cho Vito were evicted this week and their homes torn down using bulldozers after a judge overturned an appeal to save the cluster of 31 dwellings.

The draconian action in the northeast of the Canary Island has raised fears among homeowners along the Spanish coastline. It apears to reveal a determination by the Spanish government to implement its controversial coastal law which has so far only picked off a few isolated homes.

An estimated 500,000 homes, a significant number owned by British people, are estimated to be at risk. Several British owners have already been informed that their homes face demolition under the new government drive.

Mark Stucklin, of Spanish Property Insight, said: “This recent activity shows there is still a problem for coastal home owners and if anything it is getting worse.

“It seems the application of the law is completely impartial and individuals are being targeted while the powerful big developers are being allowed to get away with it.”

Residents of Cho Vito complained of the injustice of their homes being knocked down while hotels on the island also deemed to be built illegally were allowed to remain.

Locals initially refused to leave their homes but were forced out by a team of around 50 officers from the Guardia Civil who smashed down doors and gave occupants orders to grab what belongings they could carry and leave.

Some of the homes, which were modest dwellings, were built more than 60 years ago but fell foul of planning laws introduced in 1988 in a bid to protect Spain’s coastline from overdevelopment.

The demolitions followed a legal battle dating back to 1996, when the regional authorities first announced plans to clear the site.

The Spanish government has vowed to clear developments along 482 miles of coastline using the 20-year-old Ley de Costas (Coastal Law).

Under proposals announced last year properties built within 550 yards of the sea could be confiscated by the state and the owners offered only minimal compensation.


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