I guess at this point in the economic cycle the answer to that question depends on who's asking it and who's answering!
From many years of dealing with property buyers in Southern Spain, I understand that the pre-requisite is the need for a buyer to be genuinely interested in the prospect of buying. As a result, the answer to this question reinforces - or not - their planning.
Let's confront the general perception of Spain through in the eyes of an interested buyer.
The media has had a high old time kicking the "Spanish Costas" with their indignant headlines and generally wallowing in the misery of those Brits embroiled in planning scams etc. Of course, I am not going to pretend that there haven't been some awful cases featuring the most appalling rip offs. But for me, nearly three years after the bloodletting started the mid-term prospects for the market are starting to brighten. A host of the charlatan element has been eradicated and the shady operators have been forced to move onto easy picking pastures new. Sharp practices delivered by in those in sharp suits is now old hat, as clichd as the "bag of cash" purchaser.
The municipalities - the local Town Hall's - in places like Marbella have confronted their past transgressions. Under the intense spotlight of the world's media, they have been dissected by the microscopic investigations of sophisticated professionals, police and regulatory bodies. The legacy of greater transparency and accountability has been the result. After having their collective backsides kicked by regional, national and supranational governments - some even being carted off to prison for their sins - I am now - and frankly only recently - getting the distinct impression that the winds of change are blowing and drying the ink on the Town's strategy to revive Marbella and its image.
The certainty delivered to the real estate market by the extensive, and costly clean up, now means - and I believe this to be no exaggeration - that Marbella may now be regarded as one of the securest places in Spain to buy a property. I simply couldn't have said that three years ago.
The planning issues of the majority of previously questionable developments have been resolved - there is now clarity. Sadly for the owners of properties in those developments where it has proved impossible to regularise - and we all know which they are - the advice is simple - avoid them.
The effects of the turmoil in world banking post the sub-prime market collapse; have been felt in Spain as elsewhere. Along with most of the known world, the tendency to over value was widespread here and reached its peak in spring 2007.
The attendant borrowing that mirrored the swollen valuations and the subsequent decline in the market has left many Spanish lenders out in the cold. Let's not forget that they fought tooth and nail for market share, allegedly providing mortgage funds to anyone "with a pulse and a passport". I don't have huge sympathies but their marketing strategies worked - probably too well. The major Spanish Banks and Cajas (Savings Banks) have been left them with the Mother and Father of all hangovers.
The risks of Bank and Caja failure, state intervention and merger to avoid total meltdown have characterised the last two years in Spain. Mortgage and developer debt has been moved on and off the balance sheets of the lenders to protect share prices or parked in subsidiary companies.
The overwhelming sense is that despite the best efforts of the bank to portray "business as usual" the reality is that all was not well. A major cause of this continuing hiccup was the insistence of the National Bank - the Bank of Spain -under its operational liquidity rules that if a debt was declared by its lender as "bad" - or morosidad - then the declaring bank must place a deposit with the Bank of Spain. A major cost bearing in mind the amount of bad debt being held.
So the banks have tried to sell their seized real estate through branded on and off line sales operations. Let me give you a second to consider the farce that ensued with bankers playing estate agents...yes, I am sure you can picture it! The net result has been that they have conjured with all manner of incentives to induce a purchaser to take over the mortgage and buy a bank owned property effectively replacing a defaulting borrower with a new purchaser who appears to be a better risk. As you can imagine, in this way only penny numbers have been sold.
Fraught because of the sheer volume of great - but seriously overpriced - property stock, the banks have turned to certain long established real estate agents to help. This has resulted in the selected agents being allowed treasured access to the banks defaulted mortgage lists, cherry picking some of the regions primmest real estate and making it available at severely reduced, very attractive prices, to would be purchasers.
Here we need to import some reality. I am firmly of the opinion, that until relatively recently, a view prevailed amongst an interested market - particularly in the UK - that there was a clear possibility that you could get on a Malaga bound flight armed with a budget of ?75,000. On arrival the plane steps would be mobbed by property owners waiving details of their four bedroom villas in Golf Valley Nueva Andaluca and begging you to take it off their hands for the sterling equivalent of 62,000. Sorry guys....reality check number one. Even a burnt out ruin in Nueva Andaluca would have a land value in excess of ?75,000.
Realty check No.2 - in our current experience of distressed price, bank held real estate, we would confidently expect that you should not pay more than between 25% to 40% less than their previous selling price. We have many examples of two and three bed properties that had previous sales prices in excess of ?300,000 and ?350,000, respectively that should now cost you no more than ?220,000 and ?249,000.
May be something of a barometer is my own experience and interest. For many years my loyal readers will have been regaled with tales of my family's experiences in Spain. As a former lawyer, my interest has always been in advising, providing information and helping clients to assess and consider their actions. Even in operating my property services portal my main obsession was the quality of the advice and care and attention being received - the hand holding. I have testimonials attesting to the fact we provided a great service - and it's not really that difficult.
So recently when a couple of my colleagues and I were asked to join a team that had been operating very successfully in the Spanish real estate market for over twenty years, my concerns were that we'd have a clash of cultures.
I am delighted to report that we seem to have been using the same "song sheet" and the paramount interests of service and respect for client are ingrained in the business of Crest Group International (CGI) as they had been in my business. Moreover, CGI is a preferred agency partner for the majority of the banks and Cajas from whom great deals are being unearthed.
Over the course of the next few weeks my intention is to demonstrate to you that, as with most things in life, the presentation of bold facts result in the recipients needing to interpret their meaning without spin, pitch or motive. As far as I can tell I don't have a crystal ball but my senses are often correct. My assessment is that the answer to the question invariably lies in the hands of he/she who receives the information. Solid information and supporting data is the key! I intend to make available to you challenging nuggets of property intelligence from the Andaluca region which you can digest and evaluate and, who knows, you may wish to act on.
If you'd be interested to sign up to receive further information from our discrete property advisory service, please contact me on the following e-mail: mark at crest group international dotcom
Mark FR Wilkins 2010
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