House For Sale Spain And More!

Can Spain weather the downturn? The Spanish property market has had its fair share of headlines recently. If you were to believe them then the image that comes across is of a country hit by a never ending stream of bad news.

Corruption scandals, illegal building, demolition threats, land grabs, over development, dishonest estate agents, incompetent lawyers, obscene commissions and countless stories of unhappy owners, buyers and investors.

Developers are going bust, estate agents are going out of business and there are bargains for those willing to take a risk with the Spanish property market.

But when you go beyond the headlines a very different picture emerges. Yes, Spain is suffering from the credit crunch, but so are many other countries. Banks are lending less and finance is harder to find. Repossessions are on the increase.

However there is a lot of good news. According to those actually working in Spain in the property sector it is the greedy and the unscrupulous that are going out of business and that can only be good for the property market and those investing in it.

The high end of the market, particularly property in gated communities, connected to golf courses that are well built and have quality finishes are still selling well, according to Paul Rossiter of Carrington Estates.

Although custom from the UK has dropped off there is still keen interest from the Swedes, Germans, Dutch and Russians. For the market to recover it is the quality of the investors and buyers not just quantity that matters.

'There are a lot of speculators arriving who think they can get 30 to 40% off the asking price, but that just isn't happening,' said Andy Welland, who has worked in the property business in Spain for the last ten years. This is a trend seen by many agents. 'I heard of one buyer who viewed a ?550,000 property and wanted to offer ?350,000, that is not realistic. But you can find good prices, there are deals to be done,' said Rossiter.

Ten years ago Welland witnessed a lot of small businesses like butchers and hairdressers closing down and re-opening as estate agents. He saw the rise - and the fall - of big companies with branches in every town. They came, they saw, they fell by the wayside.

He saw greedy developers asking for mega prices, sales agents earning fat commissions persuading investors to buy multiple properties with unrealistic promises that they could sell before completion.

For developers it was a matter of pile them high, build them cheap. 'People were persuaded to buy beyond their means. Where they should have perhaps bought one or two apartments off-plan they were convinced they could afford five, six, seven, even more,' said Welland.

'I have spoken to five people recently that have lost 30 to 40% because they could not afford to complete. Buying to flip is a very hard game to play. You must be prepared for the worst case scenario and that is to be able to complete.'

Mark Stucklin of Spanish Property Insight agrees. 'The downturn in the market has put an end to speculative herd buying but does not deter genuine buyers who do their research,' he said.

The issue of scandals is being addressed. 'The Spanish government has focused a huge amount of effort on cleaning up the problems associated with illegal building and corruption involving the former mayor of Marbella,' said Daniel Zartesh-Lloyd, operations and marketing manager of Malaga based Duchy Estates.

'The developers who built illegally are currently going through the justice system and properties built without permission are going through a process of negotiation. This does not necessarily mean being demolished,' he added. And as Rossiter points out the land grab issue is confined to one region ? Valencia.

The Spanish government is also taking positive steps to make the real estate sector more transparent.

This is confirmed by property consultants Jones Lang LaSalle who's 2008 Global Real Estate Transparency Index shows that Spain is indeed making real progress. Spain is now ranked 16th compared with 18th two years ago.

Dodgy agents are being clamped down on too. 'The Spanish government has got really tough. Officials are conducting snap inspections to ensure that agents are adhering to regulations,' said James Gonzalez, market analysts at Obelisk.

The volume of leads has fallen by around two thirds but the quality has improved. Agents also say they have more time to spend with clients. There is an oversupply of two bedroom, two bathroom properties but not all areas have suffered massive price falls.

Some completed developments are virtually empty but many in Spain are doing fine. 'Certain urbanizations have kept their value very well. What has made Spain so attractive over the years such as climate, beaches and lifestyle doesn't just disappear,' said Zartash-Lloyd.

Full story from www.propertywire.com

The Spanish government is considering allowing commercial airlines to use military routes, which would make travelling to Spain easier and quicker. Some experts feel that such a decision could help to kick-start the Spanish property market.

If the Spanish government decides to let commercial airlines use military routes it would allow a series of new airline routes into Spain to be negotiated, improving accessibility for property investors, reports Overseas Property Professional (OPP).

Experts in the property industry feel that this would be beneficial for Spain's property market: "This is possibly the best news we've had to help kick-start the faltering Spanish property market," said Adam Gale of Costa del Sol-based Duchy Estates.

Increasing the number of airline routes into Spain would help make up the minds of property investors who are as yet undecided on where to buy; Gale added that as long-haul flights become more expensive, investors would "flock" to Spain once more rather than choosing destinations further afield.

More flights to Spain could also provide a bigger holidaymaker market for investors in self-catering accommodation in Spain; OPP points out that holidaying in Spain could save "many hundreds of euros for families choosing short-haul destinations" rather than more distant locations.

Full story from www.holidaylettings.co.uk

Whilst much of Spain is feeling the heat of a major slowdown property prices in the Andalucian city of Jerez are going up.

As much of the Spanish property market is starting to falter, the Andalucian city of Jerez is one of the few exceptions.

While many areas of Spain are currently experiencing a major slowdown in the property market, prices in Jerez are only going one way, and that's up.

"When the Spanish property market started to falter in 2007, Jerez was in a very strong position," said Chris Mercer, director of Jerez property specialists Mercers.

"According to figures from Spain's leading property portal, Fotocasa, price per square metre in Jerez was 46 per cent cheaper than the national Spanish average and a mammoth 76 per cent cheaper than the nearest-neighbouring city, Cádiz.

"In spite of adverse market conditions, Jerez clearly had some catching up to do and the potential for capital growth was obvious, thus keeping the local property market buoyant.

"As we continue through 2008 the effects of a global economic downturn and less favourable exchange rates are of course presenting various challenges, but Mercers is experiencing a steady flow of buying activity both from overseas and domestic customers. With a thriving rental market and under-valued prices, Jerez is still very much a shrewd mid- to long-term investment proposition."

Most famous for being the spiritual home of flamenco, the birthplace for sherry, and centre for Andalucian dancing horses, Jerez is looking forward to a dynamic future.

The city's international airport, already served by daily Ryanair flights from the UK is being improved to include a new runway, enlarged terminal building, plus more parking and is expected to serve four million passengers annually by 2012 (up from 1.4 million in 2006).

Crucially, Jerez airport will become the only Spanish airport, with the exception of Barcelona, to have its own AVE (fast train) connection. The AVE will bring Seville, currently a 45-minute drive or an hour's train journey, within reach of Jerez in just 20 minutes, opening up the possibility for Sevillanos to commute from a lower priced, less congested city.

With affordable entry level prices and a clear exit strategy selling to commuting Sevillanos, Madrileños or international clients keen on a holiday home, retirees who want an authentic Spanish experience within 15 minutes of the coast or taking the buy-to-let route and renting to visitors to the city (hotel occupancy is as high as 85 per cent all year round), Jerez?s property market is the envy of Spain.

Full story from www.homesworldwide.co.uk

A source tells me that some lawyers on the Costa del Sol are up to no good again. Now that their astronomical fees from conveyancing have dwindled to a trickle in the market freeze, they are having to come up with new ways to part clients from their money. This time they have come up with a ruse to sell non-performing mortgage loans as ?distressed homes?. Investors looking for distress sales on the Costa del Sol should beware.

I?m not sure exactly how it works, as it wasn?t explained to me in much detail, but it goes something like this:

Banks have clients who aren?t paying their mortgages, and the banks would very much like to off-load those mortgages onto someone else. Lawyers are helping the banks out, for a fee, by finding buyers for those debts. But, so I am told, some lawyers are misleading potential investors by presenting the deal as a distressed home purchase, or bank repossession, rather than an investment in bad debt. So investors think they are buying properties at distressed prices, but in reality they are just non-performing mortgage loans.

There is nothing wrong with investing in distressed debt. Some people have made massive fortunes in financial markets out of doing so. The problem here is that small investors on the Costa del Sol are being mislead into buying bad debts when they think they are buying property on the cheap.

I?m told there are various lists of ?deals? in circulation from banks which lawyers are using to try and snare investors.

?They are sharks these lawyers, now there?s less work about they are all trying to screw money out of people in other ways,? one estate agent told me.

So if you are an investor looking to take advantage of this market, just make sure you know what you are buying.

Full story from Mark Stucklin at www.spanishpropertyinsight.com

Increasing domestic demand for rental property boosts Spanish buy-to-let market, especially commercial areas and cities.

It?s become a well-known fact that the traditional ?fly-to-let? rental market in Spain is suffering from over saturation.

Coastal resorts are certainly as popular as ever, with Spain remaining one of the top holiday hotspots with British and European tourists, but when a situation of over supply hits the holiday property market it certainly makes it harder for investors to make money from homes they wish to earn rental income from.

However, the good news is there are some lesser-explored, more profitable pockets of the buy-to-let investment property market in Spain that previously were the well-kept secrets of professional and institutional investors only.

Now that real estate prices on average have adjusted and fallen across most of the Spanish market, it makes it a very positive time to explore these alternative buy-to-let approaches in Spain.

Mike Hamilton, sales director at Casas de Lorca and an expert on the Spanish investment property market, said: ?The main investment approach that has seen larger investors profit substantially on an ongoing basis is buying properties for rent within the larger commercial and university cities in Spain where domestic demand is not abating.

"In fact, the city-based buy-to-let property market in Spain has suffered nothing of the negativities of over supply, with many urban areas actually not having enough rental homes to meet the demand.

In the capital, Madrid, for example, we are hearing reports that 62 per cent of apartments which become available are being rented within the first month alone.

?The low supply of good quality rental property is also affecting rental prices. For example, average monthly rents in Lorca have gone up from ?400 a month to ?550 over the last three months, and as the date for the opening of the new University of Lorca approaches, demand is expected to further intensify.

"Therefore, property investors looking for a market where there is strong demand for property, more attractive underlying real estate prices and strong potential for consistent year-round rental income should be focusing their search on Spain?s most in demand cities.

"Each day we are turning down clients looking for rental apartments. When one becomes available it is rented within the week, sometimes the same day!?

Spain?s local population has suffered in much the same way as the British population from rising property prices in recent years.

This has led to a situation where more Spanish than ever are seeking rental accommodation because they cannot get onto the housing ladder.

The Spanish Prime Minister has pledged significant financial help, not just to first-time buyers, but more interestingly for buy-to-let investors too.

Direct monthly financial contributions of ?200 a month are being offered by the Spanish government to people under 30 years old to help with rental payments; proposals have also been made to help tenants raise deposits; and for landlords who agree to rent properties to under 35s to help them get into private accommodation, attractive taxation incentives have been proposed.

In Lorca, in the Autonomous Community of Murcia, where a new university campus is about to reach completion, demand for city-based rental accommodation has already pushed average rental rates up significantly.

The new university is the fourth campus for the University of Murcia and opens in 2009. Demand from professors, lecturers, administration staff and, of course, students is expected to have an overall positive and dramatic effect on the local housing market.

Property investors quite possibly have a once in a lifetime opportunity to buy property off-plan at below market prices as developers work hard to sell off stock, or to buy resale units in what is very much a buyer?s market, and earn rental income year-round from the domestic market who are being aided and therefore encouraged to rent.

What?s more, in an area like Lorca where there is a specific and undeniable reason for demand to surge, a buyer making a purchase today has an unprecedented opportunity to profit significantly from rising rental rates, and from potentially appreciating assets whose values will likely be increased as the property market in the city becomes more in demand.

Full story from www.homesworldwide.co.uk

Morgan Stanley, the investment bank, has issued a major alert on the health of Spanish banks, warning that a replay of the ERM crisis in the early 1990s could wipe out the capital base of weak lenders exposed to the property crash.

"A momentous economic slowdown is now under way. We believe the deterioration in Spain is just in the beginning stages. The bulk of the pain will be suffered in 2009," said the report, by Eva Hernandez and Carlos Caceres. "The probability of a crisis scenario similar to the early 1990s is increasing. If the ERM (Exchange Rate Mechanism) scenario were to become reality the main concern would not be earnings, but capital," it said.

"We estimate that a non-performing loan ratio of 10pc to 15pc for developers' loans would fully erase earnings in 2009 and would represent between 20pc to 30pc of the current tangible capital base of Banco Popular, Sabadell and Banesto," they said.

The grim report comes amid a fresh flurry of horrendous data from Spain. The ICO consumer confidence index has plunged to a record low of 46.3. Lay-offs continued to surge in July as the building industry - 13pc of Spain's workforce - stepped up its job purge. Unemployment has risen by 457,000 over the last year, pushing the rate to 10.4pc. "These figures are very disturbing", said employment chief Maravillas Rojo.

Finance minister Pedro Solbes told El Pais that the outlook had darkened dramatically over recent weeks as the global oil shock and rising interest rates combined with Spain's home-grown housing crisis. "The economic situation is worse than we all predicted. We thought it would happen slowly but instead it has hit fast," he said. Mr Solbes admitted that the property boom had degenerated into a "bubble" but said there was little the government could reasonably do about it. "What was the state supposed to do? Stop people building houses? That wouldn't be reasonable. Tell the banks who they can lend money too? We couldn't do that either. We warned that building 800,000 homes a year was not sustainable: and that granting mortgages for 40 years was folly, but there are certain things the government cannot prohibit," he said.

The root cause of the bubble was the extremely lax monetary policy imported by Spain after it joined Europe's monetary union. Interest rates were slashed on EMU entry, and then fell to 2pc until late 2005 - far below Spain's inflation rate. However, Mr Solbes has been reluctant to link the crisis to Spain's euro membership. As Europe's economics commissioner at the launch of the euro, his career is inextricably tied up with the whole EMU experiment.

For now, smaller Spanish banks are getting by on funding from the European Central Bank, in many cases issuing mortgage bonds with the express purpose of using them to secure loans from Frankfurt. ECB loans have tripled to ?47bn over the last year, causing rumblings of concern among regulators. The ECB is not allowed to prop up banks with long-term funding under EU treaty law.

Morgan Stanley said there was 40pc chance of a "bear scenario" leading to a 0.5pc contraction of the Spanish economy next year, with a mounting risk of an even more extreme case that replicates the ERM crisis (or worse) and leads to a 1.4pc contraction in 2009.

The report said construction investment made up 18pc of GDP last year, much of it funded by foreign investors. The concern is that a "sudden reversal of capital inflows" could leave the economy unable to finance its current account deficit, now 10pc of GDP - the world's second biggest after the US in absolute terms. The corporate sector has debts equal to 130pc of GDP. This too requires foreign funding.

Morgan Stanley said it had become concerned about the banks after the ?5.1bn (£4bn) collapse of Martinsa-Fadesa, the country's biggest builder. Loans to developers make up 26.1pc of total lending for Sabadell, 21.9pc for Banesto, and 19.4pc for Popular.

This leaves them highly vulnerable to an ERM-style bust that could push non-performing loans for developers to 14pc. "Such a scenario cannot be disregarded, in our view," it said, adding that the developers may face an even more drastic challenge than they did in the early 1990s.

The "extreme bear" case would lead to further dramatic falls in bank shares: Banco Popular (-61pc), Sabadell (-56pc), Bankinter (-51pc), Banesto (-42pc), and BBVA (-35pc). The report based its estimates on a stress test that replicates what happened in Britain in the early 1990s, as well as Spain's own travails during that period. It said BBVA enjoys a solid client base and is likely to be a "winner" once the storm passes.

The condition of Spain's lenders is a source of intense controversy, and the Spanish officials bridle at claims by foreign critics that there is any problem. The banks certainly dodged the US sub-prime debacle, thanks to restrictions by Bank of Spain on the use of off-books investment vehicles. Home equity withdrawals and "piggy back loans" are rare. Mortgages were mostly limited to 80pc of house prices, at least in theory. The great unknown is whether those price estimates bear much resemblance to reality. Ramon Lobo, a former bank auditor, said valuations were routinely inflated by as much as 25pc, allowing the sub-prime-style abuses through the back door. The Bank of Spain denounced the use of inflated appraisals in 2006.

If the practice was as widespread as feared, the default rate on ?320bn of Spanish mortgage paper sold to investors worldwide could prove higher than expected.

Spanish house sales fell 34pc in May from a year earlier, and mortgages were down 40pc. The consultancy Facilismio said yesterday that prices had fallen 6.7pc in July from a year earlier, but anecdotal reports suggest a much steeper drop. With gallows humour, Spanish journalists have begun using the term "Costa del Crash". The UK estate agent Savills said Britons are having to accept price cuts of 20pc to 30pc if they need to sell their villas in a hurry.

The vultures are starting to circle around the hapless Mr Solbes. Critics are calling for his head, accusing him of covering up the true scale of the downturn before the re-election of the Socialists in March. This seems unfair. Mr Solbes continued to dismiss warnings of a crisis as "enormously exaggerated" long afterwards. He appears to be genuinely astounded by what has occurred.

Full story from www.telegraph.co.uk

A growing number of British buyers who have invested in homes in Spain are planning to take legal action against property developers who have gone out of business.

According to reports on Telegraph.co.uk, lawyers specialising in property are noticing a surge in the number of British buyers contacting them for advice.

Some have paid as much as 50-60 per cent of the price of homes that will never be finished, while others have already taken possession of properties on half-built developments that won't be completed.

Although many may eventually get their money back it is a long process and courts in Spain are slow.

Just last week Homes Worldwide reported that one of Spain's largest property developers Martina-Fadesa, filed for insolvency, joining 60 other firms which have gone bankrupt since the start of the year when the bubble finally burst on Spain's decade-long construction boom.

Although around 1,000 people have already taken possession of their properties at Martina-Fadesa's latest resort, Costa Esuri in Ayamonte, 700 of which are British, it is full of unfinished properties, a half-built hotel and a golf course which is nothing more than bare earth.

According to the Telegraph, many of those properties that have been finished are not connected to water or electricity, and a centre containing shops and restaurants has also been left unbuilt.

It is a far cry from the dream resort investors believed they were buying into, and those who bought to homes to rent out to holidaymakers will now see them stand empty as there is little rental potential on a half-built resort.

More and more Brits are now consulting lawyers to see what action they can take as their dreams of owning a home in Spain have gone badly wrong.

Full story from www.homesworldwide.co.uk

The Marbella town council has decided to start issuing licences of first occupation (licencias de primera ocupación) before the town?s new urban master plan gets final approval. First occupancy licences will be granted to owners of Marbella properties that are expected to be legalised by the new urban plan (Plan General de Ordenación Urbana).

The decision to grant first occupation licences before the urban master plan becomes law was a contentious one that was passed without cross-party support. Marbella?s Mayor, Ángeles Muñoz, of the right-of-centre Popular Party, won the vote thanks to her majority on the town council. The opposition PSOE socialist party abstained in the vote, and the United Left?s town councillor voted against it.

Mayor Muñoz justified the decision saying that it will ?generate confidence and stimulate the economy, as well as sending a message of absolute peace of mind to owner of homes that do not have a licence of first occupation.?

The Socialists abstained on the grounds that the move lacks adequate legal guarantees, given that the urban plan has not been finally approved.

The first draft of the new urban plan was approved in July 2007, and the final draft is up for provisional approval in September, with final approval expected to follow in the Spring of 2009. Given recent changes to the draft, largely concerning the compensation mechanisms for planning infractions, the plan will have to be subjected to another round of public consultation after provisional approval in September. With that in mind, the Socialists may be right about the town hall jumping the gun.

Full story from www.spanishpropertyinsight.com

An online debate amongst readers at the website of ?El Pais? - Spain?s leading daily ? provides some insight into what the Spanish think about the country?s property and mortgage crisis.

Many of the readers point the finger of blame at the banks and the government for inflating a property bubble that has now burst, leaving ordinary Spaniards to cope with negative equity and rising unemployment.

One participant, on the other hand, points out the collective responsibility for the bubble, which many buyers helped to inflate by paying exorbitant prices for homes.

?Although we could see this explosion coming, I don?t think even the biggest pessimists thought that the crisis would get this bad,? he writes. ?But the blame can?t be pinned on the banks and property companies alone. Nor on the different governments that have been in power. At the end of the day we have all helped to created the bubble by paying exorbitant prices for flats and houses, using impossible mortgages, and ignoring our own resources. I remember friends and colleagues saying ?property prices have never fallen?, taking it for granted that if they have never fallen in the past, they will never fall in future, and that ?there is no safer investment than the real estate sector?. In fact, any time you hear comments like that about any type of investment, you can be sure that a bubble is in preparation.?

Another participant, who runs a kitchen fittings company, described his experience of the crisis. ?I have a company making kitchen fittings that I started just over a year ago,? he explains. ?I started with 16 employees, and now we are down to 11. Domestic demand for kitchen equipment is down 30%, and more than 40% on new developments, where the crisis will really be felt next year, as at the moment we are still fitting out projects started a year and a half ago. Today there are no new projects in the pipeline for next year, as nothing is being sold or financed.?

Another participant, a professor of finance and economics, blames the government for encouraging ?the most rancid, speculative, financial capitalism? at the expense of ?diversified and economically sustainable growth?. He proposes temporarily confiscating all the profits of non-industrial companies, especially banks, and using them to pay for public investment and government spending.

Many other contributors complain of having to spend everything they earn on paying a mortgage, with more pain to come as interest rates just keep on rising.

Full story from www.spanishpropertyinsight.com

Spanish property prices have fallen by 30% since Spain?s economic downturn began last year, says Santiago Baena, president of the API real estate agents association (Colegios Oficiales de Agentes de la Propiedad Inmobiliaria).

Speaking at a recent conference on Spain?s property crisis, and reported in the Spanish press, Baena said that the adjustment in Spanish property prices currently underway is ?brutal?, and that the situation this year is ?radically different? to last year, when the sector was already ?absolutely paralysed?.

Spain?s construction sector won?t stabilise and start to recover until 2009, forecasts Baena.

Baena also pointed out that many of the sector?s problems are due to a lack of regulation in the sector, and called for more legal protection for consumers. He recommends stronger legislation and the introduction of professional qualifications for real estate brokers. According to Baena, ?minimum rules of the game? are needed to prevent ?a market of the law of the jungle? in which ?anyone can operate? without any code of conduct or oversight.

He also called for a reform of local government financing, so that town councils don?t have to rely on the construction sector for their finances. Baena described the present situation as ?shameful?, and called for new legislation.

Baena then had a go at banks, who he said lent with ?enormous generosity? in the good times, but who ?now won?t lend to anyone.? He accused them of doing a disappearing act ?when the going gets tough.?

Despite everything, Baena argues that now is a good time to buy property in Spain.

Full story from www.spanishpropertyinsight.com

With its peaceful beaches and beautiful countryside, there's a lot more to Ibiza than you might think, says Laura Latham

While Spain's property market is in the grips of a downturn, one Iberian location continues to draw the crowds. Ibiza is still partying, with a residential market that is not only still very healthy but growing in popularity.

The only downside was that, until now, flights from the UK stopped between October and April, which restricted owners from using their homes for a good five months of the year. However, Ryanair has just announced a direct service that will make the island a more viable second-home destination.

"Ibiza's property market hasn't suffered like mainland Spain's," says Charlotte Williams, of Aylesford International, which has an office on the island. "But it's very different. In the 1980s and 90s the island was seen as a hedonistic resort, but now it's regarded as the centre of sophisticated bohemianism."

Though it might still be the favourite hang out of young clubbers, Ibiza has worked hard to preserve its well-heeled areas too. Away from the bustling tourist hubs of San Antonio and Playa D'en Bossa are the historic streets of Ibiza's old town and traditional villages.

As a result, the island has had its fair share of celebrity residents ? including Jade Jagger, Noel Gallagher and James Blunt ? many of whom used to party here in its early days as a clubbing paradise. However, while the mega-clubs still rock, the older crowd has moved on. "The original club set have grown up and invested in property away from San Antonio," says Williams. "They tend to buy up in the hills where it's peaceful and more secluded."

Such properties tend to be expansive villas with large areas of land, infinity pools and architect-designed exteriors costing from around £5m, with Williams reporting a "surge" in enquiries for villas priced over £10m. Ibiza is, in fact, so in demand that average family-style properties with three or four bedrooms can cost between £450,000 and £800,000, with apartments in the most-desirable locations starting at around £300,000.

However, those with lower budgets needn't feel excluded. If you know where to look, you can find apartments from under £150,000, although you'll need to seek out the busier, less popular areas. Local agent Stirling Ackroyd has a large selection of well-priced property on its books, mainly in the family-orientated resorts of Es Cana, Santa Eulalia or Cala Longa, starting at £119,000 for studios and one-bedroom properties, to around £160,000 for a two-bedroom seafront apartment.

Expect to pay more for properties in and around Ibiza Town, especially if you want the old town area, as it's a popular place to live with locals and second-home owners. "The prices there are higher and holding up well in the areas around the port and the old town," says Stirling Ackroyd's Cora Cobain, who advocates being flexible. "Going further out, to the borders of town or Figuretes, the price levels fall away sharply and for the same price or marginally more than a studio in the more desirable, older part of town, you can often find large unmodernised two or three-bed properties."

Larger residences, such as two or three-bedroom villas or townhouses in less exclusive resort areas will normally cost from around £300,000. It's also possible to find rural property or character apartments at this price level but these will tend to need renovation or some upgrading at the very least.

Doing this may well be worth your while. Charlotte Williams bought and renovated two properties five years ago and has seen them soar in value, while she is able to rent them easily for an average of £2,000 per week in the five-month summer season. She says demand for decent rental property on the island is pretty high and that anyone hoping to make enough to offset some of the cost of their investment should seriously consider it as an option.

And with the added bonus of new off-season access, Ibiza is likely to see a wave of tourists and house hunters seeking a more flexible winter sun destination. Williams says the news is "fantastic" for anyone wanting to live or visit Ibiza year round. "I'm sure winter flights will bring a fresh surge of buyers to this chic retreat."

Story from www.independent.co.uk

A recent Sunday Express article attempts to place the doom and gloom surrounding the Spanish property market into context - without rose-tinted glasses - but also without the scaremongering and hype often present in the media coverage of Spain.

In it they observe: "the glory days of double-your-money investments have evaporated. However, a new, more cautious breed of buyer is breathing hope into a market that shrank 39 per cent over the past year."

"The Spanish market basically hit the buffers about three years ago largely due to the stupidity of the authorities that allowed disaster after disaster to pile up," said John Howell, senior partner of the International Law Partnership which has 30 years' experience dealing with property negotiations in Spain.

"We are now seeing more canny investors moving back into Spain because they can see real bargains at a 30 to 40 per cent discount. It is still a viable place for property investors but it is not a market for the leading-edge investor who expects 20 per cent capital growth."

Not everyone shares the positive views, and the massed ranks of estate agents shutting up shop, builders standing idle and developments empty suggest it will be some time before a feelgood factor returns. But reputable British developers believe the crash has put the cowboys out of business and forged a new generation of sensible investment.

"The net result is ultimately good for the consumer because the estate agents who stay in business will be the ones who have upped their game. Everyone in the market will have to look at their product, make sure it is good and that they provide a good service, otherwise they won't do business," said Paul Owen, chief executive of the professional body, the Association of International Property Professionals (AIPP).

"People will not stop going to Spain and buying there. It provides a great lifestyle, is easy to get to and in the right places it is cheaper to buy than in the UK. There is no immediate sign of an upturn but Spain will still be number one for lifestyle purchases for years."

An AIPP survey places Spain top of foreign sales for UK buyers, with 24 per cent of sales in 2007 (down from 30 per cent in 2006), with France in second place at 18 per cent.

The critical facts are still grim. The market has retracted by 39 per cent, sales from developers are down 60 per cent compared to last year and the market is still swamped by unwanted homes - Spain built 600,000 a year since 2002 on the back of a decade-long boom.

Mr. Howell adds: "Property prices go up and down. They have fallen 30 per cent and I think we are at the bottom of those falls. I would be amazed if they had not recovered their value in five years. In the early Nineties there was a big dip yet they clawed back the value."

Original article in the Sunday Express on July 6th, 2008

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Martinsa-Fadesa, one of Spain?s largest residential developer, not to mention largest ever business failure, has won a reprieve from its creditors after a judge in La Coruña accepted the company?s request for voluntary administration. But whilst Martinsa-Fadesa struggles on like a zombie, kept alive by the administration courts, stories are starting to emerge that Martinsa-Fadesa did not go by the book when selling its properties.

A recent article in the Spanish daily ?El Pais? reports that Martinsa-Fadesa sold properties without building licences, and failed to provide some buyers with bank guarantees to cover their stage payments, which is against the law. It may be illegal, but the hapless buyers will do all the suffering: They may be looking at big potential financial losses, whilst Martinsa-Fadesa only has to worry about a slap on the wrist for an ?administrative infraction?.

And whilst Martinsa-Fadesa enjoys a break from paying its creditors during the administration process, individual buyers have to keep making their stage payments for properties that nobody can guarantee will ever get built. ?Voluntary administration helps companies in distress, but does nothing to protect the interests of citizens,? the notary José Ignacio Navas Olóriz told ?El Pais?.

?Bank guarantees should be provided and updated immediately, as required by law,? Navas Olóriz went on to explain. But sources at Martinsa-Fadesa told ?El Pais? that it takes one or town months to arrange bank guarantees.

Martinsa-Fadesa also claims it did its best to rectify an unforeseen problem with building licences that it inherited from Fadesa when Martinsa took over the company in 2007. Of the 16,000 properties Fadesa was selling in December 2007, Martinsa withdrew 4,000 from the market for not having appropriate licences. The developer also says that, once it had taken over Fadesa, it gave buyers of properties without licences the option of backing out.

Now that it has gone into voluntary administration, Martinsa-Fadesa has left 12,578 of its clients wondering whether they will ever see the properties they have partly paid for, and worrying what will become of their stage payments.

Juan Carlos Gamboa, a Spaniard who bought a villa off-plan from Fadesa in 2005, is one of those clients. Gamboa has paid 96,000 Euros in stage payments for a villa that has not yet been built, and has spent 3 years asking for a bank guarantee without success.

But even buyers lucky enough to have a bank guarantee are finding they are far from in the clear. The article reports that, in some cases, the financial institutions providing the guarantees are trying to wriggle out of honouring them. It?s a familiar story.

With or without bank guarantees, Martinsa-Fadesa?s clients face months, perhaps years of not knowing what will happen to their money. Meanwhile, buyers who have taken possession of properties on one of Martinsa-Fadesa?s half finished developments will have to get used to their views of a building site.

Full story from www.spanishpropertyinsight.com

A new report from the Spanish appraisal firm Tecnitasa reveals that the cheapest rental properties on the Spanish coast are located in the provinces of Lugo (Galicia), Tarragona (Catalonia), and Alicante (The Valencian Region). In all of these provinces you can rent an apartment looking onto the beach for less than 1,200 Euros a month in August.

For example, renting a front-line apartment of 65 metres squared in San Ciprián, Lugo, costs 812 Euros for the month in August, compared to 5,200 Euros for the same sized apartment in San Sebastian (Basque Country).

More expensive, but still relatively cheap are the provinces of Granada, Málaga, Almería, Valencia, Tenerife and Murcia, where a front-line tourist apartment in August costs less than 2,000 Euros a month on average.

Next comes Asturias, Barcelona, Cádiz, Cantabria, Castellón, Huelva, Las Palmas, Mallorca and Pontevedra, where average monthly rentals on the beach in August cost between 2,000 and 3,000 Euros.

The most expensive provinces for summer holiday rentals are Gerona, Guipúzcoa and Ibiza, where the same 65 metre apartment in San Sebastian, Begur, or Playa d?en Bossa costs more than 4,500 Euros, all according to Tecnitasa.

Full story from www.spanishpropertyinsight.com

Soaring inflation has been a major news item for some months and record inflation rates are hitting countries worldwide. The main contributors to rising inflation have been the staggering surge in the price of oil and rocketing food prices. Oil prices have not just affected the fuel in your tank or the cost of an air flight but they have a roll on effect in many areas including manufacturing and services.

Spanish fishermen, taxi drivers and truckers have all staged disruptive protests over the price of fuel which has put their livelihoods at risk. Similar workers in other European countries have also demonstrated their anger and called for government assistance to help them through the crisis.

Inflation in the Eurozone hit a record 4% in June (latest figures available at time of writing). It was the highest rate recorded since the Euro was launched nine years ago and double that of the European Central Bank?s (ECB) target rate of ?below but close to 2%?. If you think that sounds bad enough, inflation in Spain hit a 13-year high of 5%. A year earlier, Spanish inflation was just half this rate and stood at a more acceptable 2.5%.

According to the Spanish Institute of National Statistics (INE), transport has been the main reason for the rise in inflation over the year due to the substantial rise in the price of fuels and lubricants for personal transport equipment. Food and non alcoholic beverages came next with housing in third place because of the increase in heating fuels.

Spain?s Finance Minister, Pedro Solbes, commentated that the inflation report was ?not good news?. Solbes had earlier anticipated that Spain ?should end the year with inflation close to 4%.?

The latest Euro inflation figure caused the ECB to step up its interest rate a quarter point to 4.25%, the highest interest rate for seven years. Both the ECB and the Bank of England (BoE) have said that inflation rates would remain above target through to 2009 and advised against hiking salaries to cope with the situation as higher wages would stoke inflation.

The governor of the Bank of Spain, Miguel Angel Fernandez Ordonez, who is also a member of the ECB?s governing council, had warned that Spain faced the danger of a wage-price spiral due to wage indexation clauses in union work agreements.

The UK is also facing record high inflation with June?s inflation figure coming in at a 16 year high of 3.8%. The BoE had kept interest rates on hold at 5%. Its preferred level of inflation is 2%.

Many people are finding it hard to make ends meet. It is not just those on salaries who are seeing their income levels fall below their expenditure. Retired people usually only have their pension income to live on and whatever savings and investments they have managed to make. What may have seemed like a good income forty or fifty years ago when they began contributing to a pension pot could have fallen in value dramatically due to inflation. When it comes to actually taking a pension it may not be enough to provide the kind of living standard they had expected.

Reaching retirement is a significant stage in a person?s life and often brings significant lifestyle changes too. It may be that you are planning to move to Spain on retirement. Whether or not you do or remain in the UK, retirement is a point when you should review your financial situation and plan ahead. People today can live twenty or thirty years in retirement. Your investments, savings and pensions need to be looked at closely to make sure that you benefit from the most they can offer.

Inflation is probably the biggest threat to your financial comfort and survival, followed by taxation. Not only does inflation shrink the spending power of the cash in your pocket but over a twenty to thirty year period inflation can erode the value of your wealth by between 50% and 70%. You just need to think about how much items cost thirty years ago and how much they are today to realise how frightening this can be.

Many retired people like to keep their money ?safe? in the bank. The stark truth is that banks are not the safe havens they have seemed to be. Banks are no longer solid institutions of reliability and respectability as recent bank crises have revealed. But perhaps more importantly, cash in the bank is vulnerable to high inflation and exposed to taxation. Even though capital held in a bank is usually protected, it does not have the opportunity to grow. On top of that, interest is taxed which can virtually wipe out the returns.

For instance, in Spain bank interest rate at 4% is swallowed by the inflation rate of 5%. The interest earned is taxed at 18%. Bank interest in the UK at 5% with inflation at 3.8% means you are earning a paltry 1.2% interest on your savings. For a basic rate UK taxpayer this is taxed at 20%.

Bear in mind that official inflation rates are misleading and are often lower than an individual?s personal rate of inflation. Official inflation rates are based on a set ?basket of goods?, usually containing basic and necessary items and some fashion purchases of non basic items that are popular at the current time. Not everybody buys all these items, though, and some people, and categories of people, spend the bulk of their money on other things. Research has revealed that a retiree?s rate of inflation can be two of three times above the official rate. It is interesting to note that both the INE and Eurostat, the European Commission?s statistical agency, places Europe?s ?basket of goods?, the Harmonised Index of Consumer Prices (HICP), as 5.1% in Spain.

A proven way to fight inflation is to set up a portfolio containing assets that are well diversified across a wide range of countries, currencies and industrial sectors. Your portfolio should comprise a broad mix of equities, property, bonds and cash. A portfolio such as this can be structured for your specific requirements, such as long-term capital growth, income if required and to provide for your heirs. It will be designed to combat the long-term eroding effects of inflation and to lessen the impact of taxation as well.

If you are planning on moving to Spain make sure that you talk to a financial adviser who is fully aware of investment and tax mitigation laws and procedures in both Spain and the UK. You will receive the best advice for your particularly circumstances and you should arrange a consultation preferably before you leave.

Full story from www.blevinsfranksinternational.com