My name is Colin Winder and I retired in 2004.In 2006 my wife and I bought an apartment in Benalmadena, since when I have followed with great interest and increasing anxiety the problems of the Spanish property market. I am not a professional in any of the skills usually associated with the property market but I do have an interest in them, together with a critical approach to information regarding the current state of the market.
The recent article by John Wolfendale gave a fairly upbeat view of the Spanish property market in the post credit crunch period. Whilst agreeing with much of what John says, I feel that input is also needed from someone not as close to the Spanish property scene. I am not a property professional and do not live in Spain. I do however have a vested interest in the Spanish property market because my wife and I bought an apartment in Benalmadena in 2006.
John has highlighted some of the factors, such as corruption in local administration, which have contributed to the current bleak picture. For the future, signals coming out from those now in charge of local administration show good ideas for regeneration and many of these are no doubt starting to work. Many of the current press articles stress the positive aspects of buying in Spain; however, these comments need to be tempered by the fact that the writers are usually involved in promoting property sales and the current time is of course somewhat of a bonanza for bargain hunters, irrespective of the long term prospects.
No doubt there are many positives to be taken from the current situation but in my view there is an underlying problem in that the impression at street level is sending out the wrong signal to potential buyers. This view is based on a very recent trip to the Benalmadena area where there are lines of unsold properties, projects not completed and deserted unfinished developments with walls, roads and services in place but already signs of nature reclaiming its territory.
This is hardly presenting a good message to potential property buyers. The Benalmadena area now depends on property for much of its income and prosperity and, since tourists may also be potential buyers, I cannot see that this bleak picture doing anything other than undermine the fundamentals. I believe that what is needed is active management of the situation by those responsible for promoting the area as the number one destination for property buyers and would suggest the following points need to be addressed.
The number of properties under construction in the Benalmadena area still appears to be out of proportion to the number of potential buyers. The planning problems under the previous administration are no doubt still filtering through, but can all of the present unfinished work can be laid at their door? It seems that every last space is in the process of being turned into a building and for those planning to invest in property in the area this is not necessarily a healthy sign; even though in theory it means more choice for the buyer, a happy mixture of concrete to non concrete would seem to be desirable. The question therefore remains as to whether planning supply and demand is as yet being properly managed?
A particular problem is that of unfinished developments. On our complex the final stages have been carried out with much less speed and enthusiasm than when the project started and it was in the developer's interest to attract buyers and get cash flowing. Towards the end of the development it seems that the energy has gone, as evidenced by the part finished buildings and roads which are a poor advertisement to visitors, however good the earlier construction. Part of the problem may well be the current property downturn but it may also just be the desire of the developer to move on to the next site at the earliest opportunity, irrespective of whether the current one has been properly completed. Are developers not under a legal obligation to finish off the complete development properly before moving on?
Thinking further of the impression on visitors, near our development are several grassy mounds affording wonderful views across the coastal strip to the sea. They have roads to the top and are accessible by car but the areas are littered with construction waste and general rubbish. With a little effort these place could be attractions such as picnic spots that would enhance the area. Unless the mounds belong to someone other than the local authority or the developer there seems no reason why such eyesores exist; they are just another indication of a lack care over the impression given to potential investors in the area.
Of course one problem that really needs solving is the current high level of interest rates. Until recently it seemed that rates would continue to rise indefinitely, surely killing off the property market for once and for all. In the last few weeks the rate has dropped slightly and this has made a big difference to mortgage payments. However if it seems that the setting of interest rates is best left solely to the banking industry, perhaps it is time to reconsider. It is surely time those responsible for creating the climate in which the property sector can flourish to have their input. Low interest rates caused the problem initially by attracting too many buyers and inflating prices. High interest rates have compounded the problem by causing a shortage in buyers and a consequent drastic fall in property values. This does not seem very much like sensible management or joined up thinking between those whose job it is to lend or borrow money and those who feel the effects of changes in interest rates.
I came away from Spain despondent that such a wonderful resource still appears to be being mismanaged. Most coastal regions have thrown in their lot with the tourist and property industries and it is surely therefore incumbent upon them to make a better job of overseeing the impact of the construction industry on their land than they appear to be doing at present. In my view the current situation is a timely reminder to Spain that it does not have a monopoly on buyers seeking to invest in a holiday home and that, despite the fundamentals, there are other countries ready to take buyers disappointed with what they currently see in Spain.