View more on these topics

Housing market is wilting under the Spanish sun

If you think the UK property market is in bad shape spare a thought for developers and investors in Spain

SIMON WHITE, DIRECTOR, LONDON’S CHARTERED SURVEYORS
SIMON WHITE, DIRECTOR, LONDON’S CHARTERED SURVEYORS

I regard myself as your front line reporter, a sort of Kate Adie of the property world, only better looking.

As my devotion to duty knows no bounds I spent a good part of last week at my hacienda in southern Spain mulling things over with my good friend Rioja.

Let me tell you, things are dreadful down there. We think we’ve got problems in the UK but it’s a whole lot worse in Spain.

Property values have tumbled. Whereas just three years ago I could drive five miles in either direction and see more cranes than the Chelsea team and Tiger Woods have mistresses, I now seen none.

As in the UK, the Spanish always start property developments by putting the appropriate infrastructure in place.

Near my place there are two developments that three years ago featured well surfaced estate roads, drains, street lamps and seductive sales offices.

Now, both are wastelands, resembling spaghetti Western sets without the buildings.

I just wonder how many poor sods chose their plots, carefully selected their villa types with sea views and then paid their 20% deposits.
All their dreams have gone up in smoke.

Developments are now like wastelands, resembling spaghetti Western sets without the buildings

Oh how things have changed. Not so long ago you couldn’t take a Sunday afternoon drive through Surrey without seeing exhibitions promoting the Spanish property market at every other hotel – they were like golf sales.

Celebrities tripped over themselves to get involved, Sir Ian Botham prominent among them.

How convincing it all was. The best story of the lot – which I fell for – was the claim that southern Spain has 320 days of sun every year.

This is true, but what they don’t tell you is that sunny days don’t mean warm days. Like a January day over here, it can be sunny but perishingly cold in Spain.

You won’t find a developer who will admit it but five years ago, for one day only, it snowed in the La Manga region of Murcia for the first time in 50 years.

I know it’s true because I was there.

The Spanish went into a frenzy and sales of instant cameras shot through the roof.

Most had never seen snow before.

It was a bit sad because in reality it was only a smattering of the white stuff, not even enough to cancel a UK train. The kids tried to build snowmen but there wasn’t even enough to make a decent snowball.

So where does the Spanish second home market go from here? Downhill, I’m afraid.

Not even the wealthy residents of Madrid and Barcelona are willing to take a chance as they face unemployment rates of up to 25% and an economy in marginally worse shape than Greece’s.

Near my place there’s a substantial development where building did not stop until the end of 2008. Of course, it now contains properties they can’t give away.

I suppose one way to look at this is that what goes around comes around and for adventurous souls, this could be the right time to take a punt.

Interested?

Recommended

TMW gets back into niche sectors

The Mortgage Works has launched buy-to-let products for houses in multiple occupation and limited companies. The Nationwide subsidiary left these niche markets in December 2008 and February 2009 respectively but has become one of the first mainstream lenders to relaunch in the arena. The range for customers investing via limited companies offers rates from 4.34% […]

How to balance bottom-up with top-down research in constructing multi-asset credit portfolios

In this short video, Azhar Hussain, head of global high yield at Royal London Asset Management, explains how his team balance bottom-up with top-down research in constructing multi-asset credit portfolios. Watch the video in full The value of investments and the income from them is not guaranteed and may go down as well as up […]

Newsletter

News and expert analysis straight to your inbox

Sign up