The Wall Street Jounral 18 10 2011: Spain Feels the Housing Pain

October 18, 2011, 8:47 AM GMT
  • Spain Feels the Housing Pain

    Cranes erecting the Pelly tower under construction in Seville.

    Spain's property bust is only getting worse. The wonder is that the country's economy and banks are still this resilient.

    The Spanish government said Tuesday that housing prices remained in free-fall in the third quarter, dropping 5.5% from a year earlier, the biggest decline since 2009.

    This makes Spain, in many senses, the worst case of a property bust in the developed world—the country is already deep in its third consecutive year of falling prices, with no rebounds.

    Last year, the pace of decline slowed significantly, signalling some light at the end of the tunnel, but another metaphor is called for instead: that last year's respite was nothing more than a dead cat's bounce.

    The good news should be the overall amount of the decline, since Spain's government says prices are only down 18%, in nominal terms, since their peak in early 2008.

    But that doesn't include the effect of Spain's persistent inflation, one of the highest in the euro zone, which makes the real drop closer to 30%—Spain's government didn't provide real price data in today's release.

    After earlier predictions of a short-term correction have been smashed, some analysts now say prices may keep falling for the next two years, eroding Spain's household wealth and banking balance sheets.

    Meanwhile, banks are struggling to keep up with the loss in value of the collateral against €400 billion worth of loans to construction and real estate firms, an amount that remains unchanged since 2008.

    For Luis Garicano, a professor of economics and strategy at the London School of Economics, this number is perhaps the most dangerous of those related to the bust, since it indicates the banking sector exposure to such loans hasn't diminished.

    He estimates that a possible explanation is that banks have exchanged some non-performing loans for property that they now own, but not enough to offset the rising interest on the loans.

    Many, if not most of these loans, are being rolled over to keep zombie developers in business, in the hope that the market will recover.

    All the same, banks have also turned into property developers now.

    Walk into any Spanish bank branch, looking for a mortgage, and you will see that is much easier to get it if you'll just take one of the many, many houses the bank acquired from a bankrupt developer. But many will say why worry? The same house will be even cheaper next month.

  • 20 Minutos 25 10 11: Wall Street Journal y la burbuja inmobiliaria española

    20MINUTOS* : "Lo asombroso es que la economía y los bancos del país sean aún tan resistentes". De este modo se refiere el diario 'The Wall Street Journal' al actual momento de la economía española y más concretamente a la burbuja inmobiliaria. El diario neoyorquino, "biblia" mundial de la economía, se asombra del caso español y considera que la burbuja inmobiliaria española "empeora".
    En opinión del periódico norteamericano asegura que "el estallido de la burbuja inmobiliaria en España no hace sino empeorar. Lo asombroso es que la economía y los bancos del país sean aún tan resistentes".
    A partir del último dato del precio de la vivienda (descenso interanual del 5,6%), 'The Wall Street Journal' afirma que el caso español "es el peor estallido de una burbuja inmobiliaria en el mundo desarrollado, con el país ya metido de lleno en su tercer año consecutivo de descensos de los precios y sin ningún repunte".

    El problema es la exposición de la banca

    El diario echa mano de las metáforas para describir que el 2010 no fue un año tan malo como sí lo está siendo el 2011: "El respiro del año pasado no fue sino el espasmo de un moribundo".

    El periódico de Wall Street apunta un dato: los bancos han otorgado a contructoras e inmobiliarias créditos por valor de 400.000 millones de euros. Al respecto ha preguntado al prestigioso Luis Garicano, catedrático de economía y estrategia de la London School of Economics, quien considera esta cifra la más peligrosa de las vinculadas al estallido de la burbuja, ya que indica que la exposición del sector bancario a este tipo de préstamos no ha disminuido.

    'The Wall Street Journal' confirma lo que ya venimos contando desde hace meses. Si entramos en cualquier sucursal bancaria en España en busca de una hipoteca, "comprobarán que es mucho más fácil obtenerla si compran una de las muchas viviendas que el banco adquirió a alguna inmobiliaria quebrada".

    Y añade que "muchos opinan que no hay prisa, porque la misma vivienda será aún más barata el próximo mes".

    * 20 Minutos - 25.10.11
    Foto: Viviendas en construcción - 20minutos


    Telegraph 18 10 2011: Spain's housing secretary 'in denial'...

    Spain's housing secretary 'in denial' about expat property problems

    Marta Andreasen MEP has claimed Spain's secretary for housing 'is in denial' regarding the severity of the problems affecting British expats who have invested in Spanish property, following a heated exchange at an international property exhibition in London.

    Beatriz Corredor at the Spanish Property Roadshow
    Spain's housing secretary Beatriz Corredor (pictured), who was in the UK promoting Spanish property this week 

    The argument took place following a speech delivered last week by the Spanish housing secretary Beatriz Corredor, who called for Britons to trust in Spain and to take advantage of its ripe property market.

    UKIP's Marta Andreasen MEP said: "I was quite upset that she refused to accept or mention the fact that were serious problems affecting Brits in Spain.

    "She referred to new reforms that had supposedly made Spain a safe country in which to buy, but these reforms neither resolve the past nor the present problems.

    "The British are among the highest proportion of foreign property purchasers, but the bad reputation Spain has earned itself has seen the level of interest in Spanish property plummet. This so-called ‘property roadshow’ was to address that with the aim of portraying that everything is fixed and the Brits can start spending their money again. How wrong this is.

    "Regional governments pick fights with local governments, mayors and politicans take bribes, then get prosecuted for corruption – it really is difficult for any British person to trust anyone throughout the home buying process.

    "The minister made out that there were just one or two people with problems and that these were getting sorted out."

    A decree to legalise existing illegal properties combined with a reduction in new home tax and falling house prices made Spain the ideal place in which to invest, said the minister during her address to an audience of developers, investors and protesting British investors who gathered at London's Docklands.

    No mention was made of the many thousands of expats who have bought in good faith only to be told their houses are illegally built and therefore unsellable, and excluded from local water and electricity supplies.

    It was the second time this year that the secretary had addressed a British audience of potential investors and explained why Spanish property is such a good investment.

    The discussion between the pair was brought to a close by the Spanish Ambassador, Carles Casajuana, who led the Spanish housing secretary away after Marta Andreasen refused to shake her hand.

    "I spoke in Spanish and in English so that people around would understand," said Ms Andreasen. "Afterwards I was approached by developers who said they too had been affected by the Spanish government's refusal to sort out the problem, and didn't expect to sales to pick up until the current problems had been solved."

    The MEP has long campaigned on behalf of Brits caughts up in Spain's planning and property scandals. She is currently urging the EU to stop funding Spanish regions until they resolve these problems.

    Telegraph Expat's Spanish Planning Scandal campaign is supporting the thousands of expats who have been affected by the illegal homes crisis in Spain. You can find all the latest news on the situation here.

    AUAN: Nota de Prensa 18 octubre 2011

    Contacto: Patricia Sampson 638323706

    AUAN, el colectivo inglés que lucha contra los abusos urbanísticos en la Valle de Almanzora, ha aconsejado a los británicos "no ser llevados a engaño " por la última medida presentado por la administración central supuestamente para restaurar confianza en el sector inmobiliario español.

    En julio el Colegio del Registradores ha presentado una nueva página web en inglés (https://buyingahouse.registradores.org/) con el supuesto objetivo de simplificar el proceso de comprar una vivienda por compradores extranjeros. El Registro pretende ofrecer información en inglés de los más de mil Registros de la Propiedad y  la iniciativa fue aclamada por el gobierno español como una de las nuevas medidas para reforzar la seguridad jurídica del sector inmobiliario.

    La semana pasada, la iniciativa fue enfatizada por la secretaria de Estado de Vivienda, Beatriz Corredor, durante la segunda fase de su gira internacional ('road show') en Londres para tratar de revitalizar la economía española a través de inversiones extranjeras en turismo residencial. Decía Sra. Corredor del nuevo servicio en inglés "de esta forma, los ciudadanos extranjeros podrán disponer, de forma mas comprensible para ellos, de toda la información sobre la situación física, jurídica y urbanística de la vivienda, de manera que cualquier comprador puede acudir a este registro antes de adquirir un inmueble para comprobar que no hay ningún riesgo en la operación."

    En una entrevista con el periódico inglés, el Telegraph, Sra. Corredor decía "Que vengan aquí tranquilamente, y se fíen  del sistema que tenemos y de la transparencia que hay. Si el documento  no hace mención de procedimientos jurídicos, el comprador,  siguiendo los pasos correctos, puede contar con garantías jurídicas en su compra."

    Pero después de probar el sistema, AUAN ha encontrado que las pretensiones del gobierno  tienen fallos muy serios en la práctica. Según la Presidenta, Maura Hillen, "Hemos probado el uso de la versión británica de la pagina web del registro sin éxito alguno. Ni siquiera podía encontrar una propiedad aun que le hemos metido el número de la finca.  Entonces lo intentamos en español. Hemos llevado a cabo una búsqueda de tres casas. Dos de ellas han sido objeto de orden de demolición hace tres años, y aunque estas órdenes fueron suspendidas existen procedimientos judiciales en curso sobre estas fincas. Las Notas Simples Informativas no especifican nada de esta problemática urbanística, ni del riesgo de demolición de las viviendas."

    "La tercera casa que hemos probado era la de la pareja Prior, en Vera. La búsqueda reveló su ubicación en Almería y el hecho de que tuviese una vivienda de dos plantas y  una piscina rectangular con escalones semicirculares, pero no reveló que fuera considerada como una casa ilegal; ni siquiera que esta casa fue demolida en enero del 2008."

    "Las garantías del gobierno no son garantías suficientes algunas" dijo Sra. Hillen. "Aparte de otras consideraciones las nuevas normas fueron introducidas en el ordenamiento en el julio del año pasado y no se aplican retroactivamente al Registro. ¿Como fiarse entonces?"

     "Hay miles de casas consideradas como ilegales en nuestra zona. Son miles los dueños inocentes, compradores en buena fe, que tienen que enfrentarse a una gran inseguridad jurídica. Están abandonando sus hogares y la economía española en número cuantioso. El gobierno tiene que arreglar la situación de los que han comprado ya antes de mandar políticos a Londres ofreciendo un servicio y una garantía jurídica que realmente no vale para nada". 


    Telegraph 14 10 2011: Criticisms for Spanish Government's property service

    Criticism for property service run by Spanish government

    When the Spanish government unveiled a new property register in English designed to simplify the buying process and clarify whether properties were legal and safe to buy, it was supposed to encourage British buyers to dip a toe back into the Spanish property market.

    Spain's Land registry service criticised as failing to help foreign investors in their due diligence property checks
    Despite the hype, Spain's online Land Registry service has been criticised as unreliable and out-of-date Photo: Frans Lemmens / Alamy

    That was until users began to complain that the service provides what they say is misleading documentation in indecipheral English.

    In exchange for €23 euros, prospective British buyers can search for a property online, carry out their own due diligence and, should they wish to buy one, receive a Land Registry Certificate that proves they bought their property in good faith. In theory completing this process guarantes them judicial support.

    However, a check on a 5,000 square-metre property bought by Colin and Sandra Byrne in 2006 correctly states the size and description of the property in Albanilla, even down to the sloping ceilings and the fact that "the main front faces the mid day" [sic].

    What it fails to mention is that the €275,000 property with a €25,000 landscaped garden is subject to a land grab by a developer, who plans to use half of the Byrnes' land as part of an urbanisation project that will include 47 car parking spaces, two houses and a public space.

    Colin Byrne said: "The first thing that struck me was it looked as if someone had taken the information in Spanish from the records and 'googled' it into English.

    "They described my plot, which is full of olive and almond trees, as 'a piece of dry land for cultivation of cereals with an area of 48 areas 80 centiares'.

    "But more importantly for a prospective buyer, I would think, is the fact that my property is subject to a 'land grab', which went unmentioned on the document that cost me €23.

    "A builder is planning an urbanisation and I and three of my neighbours stand to lose over 50 per cent of our gardens. The plans have been in Abanilla Town Hall since June 2007 and we had the official notification in 2010."

    It is not just the translated documents that are giving cause for concern. The service seems to be equally flawed in Spanish.

    A check on a house bought by Len and Helen Prior in 2003 reveals its location in Almeria and the fact it had a "rectangular pool with semicircular stair access", but doesn't disclose the fact it was deemed to be illegal. It was demolished in January 2008.

    A search for details on a further two properties deemed illegal three years ago in Albox and subjected to demolition orders that were later suspended pending a retrial, returns no information relating to the properties' legal history.

    The property service in English was rolled out shortly after Spain's housing secretary Beatriz Corredor came to London with the Spanish Property Roadshow in April this year.

    Prior to her arival, she was reported in a Sunday Telegraph interview as saying: "Come here calmly, and trust in the system that we have and the transparency we provide.

    "If there is not any mention of legal proceedings on the document, the person who buys the property through the correct channels will then know there is judicial support."

    The online service was part of a package of reforms steered through the Spanish parliament in a bid to improve Spain's tarnished real estate reputation and boost its withered economy by encouraging investment.

    A spokesman for the Spanish government said: "Last July, the Spanish government approved a new regulation that, amongst other measures, obliges town councils to inform the Association of Spanish Property and Commercial Registrars about any urban development regarding properties. As every regulation in democracy, it doesn't have retroactively [sic]."

    There are estimated to be 700,000 unsold holiday homes in Spain, the majority of which are located along the southern coastlines, where property prices have dropped by as much as 60 per cent in certain regions.

    The second leg of the Spanish property roadshow is currently in London, providing a platform for developers to sell their properties to UK buyers.

    Telegraph Expat's Spanish Planning Scandal campaign is supporting the thousands of expats who have been affected by the illegal homes crisis in Spain. You can find all the latest news on the situation here.



    Fwd: El Mundo / The Telegraph: El aeropuerto de Castellon....Spain's white elephants

    7 10 2011

    ECONOMÍA | Diario británico

    The Telegraph ve el aeropuerto de Castellón como ejemplo del 'derroche' público en España

    Las bases y las pistas aún no tienen operatividad a falta

    Las bases y las pistas aún no tienen operatividad a falta de permisos. | ELMUNDO.es
    • Se titula 'Spain's white elephants: how country's airports lie empty'
    • Se refiere a la base como un macroproyecto que cuesta más de lo que rinde
    • Tampoco se 'salva' de las críticas el aeropuerto de Ciudad Real
    Europa Press | Castellón
    Actualizado viernes 07/10/2011 19:02 horas

    El aeropuerto de Castellón protagoniza un artículo en el diario británico The Telegraph sobre el "derroche" de dinero público en megaproyectos que pululan por el paisaje español.

    El reportaje se titula 'Spain's white elephants: how country's airports lie empty' (Los elefantes blancos españoles: cómo los aeropuertos regionales permanecen vacíos).

    El término 'white elephants' hace referencia a aquellas posesiones que tienen un costo de manutención mayor que los beneficios que aportan. La periodista Fiona Govan explica que el último ejemplo de este tipo de infraestructura es el aeropuerto de Castellón, inaugurado en marzo con un coste de 150 millones de euros, y cuya torre de control "no ha guiado el aterrizaje de ningún avión".

    "Elefantes blancos que ensucian el paisaje español, megaproyectos a menudo financiados por dinero público que han ayudado a conducir a España hacia el 'boom' y simbolizan el derroche de dinero que ha contribuido al espectacular descalabro económico", destaca el artículo.

    Según explica la periodista, el aeropuerto de Castellón se construyó con la promesa de ser una puerta a una "región no descubierta", un proyecto que generaría empleos "en un país que cuenta con un 21% de desempleo".

    Seis meses después, esté complejo espera que le otorguen la licencia para operar, algo que "muchos atribuyen a las diferencias entre el conservador ejecutivo regional y el gobierno socialista de Madrid", dice el artículo, y, además, destaca que el aeropuerto "todavía no ha atraído la atención de las aerolíneas low-cost tan necesarias para su éxito".

    Ciudad Real y Huesca

    A continuación, el reportaje salta al aeropuerto de Ciudad Real, donde Vueling ha eliminado algunas rutas a causa "de la escasa rentabilidad, el incremento del precio del queroseno y el estancamiento de la economía española". "Con sólo dos vuelos a la semana, -Vueling- es la única aerolínea comercial que opera" en este aeropuerto, explica.

    Otro de los protagonistas del artículo es el aeropuerto de Huesca, abierto en 2009 y pensado para "atraer" a esquiadores a las pistas de los Pirineos. Según Govan, "en 2009 el aeropuerto sólo recibió a 6.228 pasajeros", por lo que cada pasajero "costó a los fondos públicos alrededor de 700 euros", remarca.

    De los 48 aeropuertos regionales construidos en este "país apretado por las deudas", "solamente once de ellos han obtenido beneficios en los últimos 20 años", aclara la corresponsal en Madrid de The Daily Telegraph.

    Govan finaliza el artículo con las declaraciones de un jubilado de Castellón que asegura que "no le sorprende" el destino del último aeropuerto construido en España. "Siempre pensé que era estúpido construirlo aquí cuando estamos a menos de una hora del aeropuerto de Valencia", confiesa el anciano, quien finaliza: "y pensar que estábamos preocupado por el ruido de los aviones". "Qué broma".

    Spain's white elephants – how country's airports lie empty

    Only 11 of Spain's 48 regional airports are profitable and its newest project has yet to see a single passenger through its terminal.

    By Fiona Govan, Castellón

    8:45AM BST 05 Oct 2011

    The gleaming new air traffic control tower shimmers in the midday heat, visible for miles around, it rises up above groves of orange trees in the agricultural region of Castellón, north of Valencia.

    But it has yet to guide a single aircraft onto the 3,000 yards of virgin runway at Spain's newest airport, inaugurated in March at a cost of 150 million euros (£130 million).

    The metal clad terminal stands empty, its vast car park untarnished by a single vehicle, weeds growing up through the pavements, the only sign of life.

    It is the newest example of infrastructure "white elephants" that litter the Spanish countryside, huge projects often funded by taxpayer money that helped drive Spain's economic boom and that have come to symbolise the wasteful spending contributing to its spectacular bust.

    Castellón Airport promised to be a gateway to an undiscovered region, providing jobs for locals in a country struggling with 21 per cent unemployment rate, and delivering tourists tempted by cheap deals to some of Spain's most beautiful white sand beaches.

    But six months after its completion it has yet to be awarded an airport license – a fact many attribute to political differences between the Conservative-run region and the socialist government in Madrid – still yet attract the attention of the low-cost airlines deemed so necessary for its success.

    The fate of another of Spain's airports will do little to encourage investors in Castellón. Next month Spanish low cost carrier Vueling will cease to operate routes from Ciudad Real airport, 125 miles south of Madrid in Castile-La Mancha.

    "Low profitability of the routes, increased cost of aviation fuel, and the stagnation of the Spanish economy have forced the decision," the airline said in a statement.

    With only two flights a week it was the only commercial airline left operating.

    The airport, the first privately-owned venture in Spain although publicly subsidised, opened in December 2008 costing close to 1 billion Euros and with the ambition of becoming a cargo and passenger in the shadow of the capital's Barajas airport. It was even called Madrid South.

    But far from meeting its target forecast of 1.5m passengers a year, it managed only 100,000 in 2010, and saw airlines including Ryanair, Air Berlin and Air Nostrum drop it from their routes as unprofitable.

    Last year the company that ran the airport went into receivership owing millions to contractors, and leading the Bank of Spain to take control of the regional savings bank Caja Castilla La Mancha which bankrolled the project.

    Under specially negotiated employment contracts all airport personnel, even its executives, rotate with three months on the job followed by three months at home on the dole.

    Another example is Huesca airport, opened in 2007 in the shadow of the Pyrenees in northeastern Spain, regional authorities hoped to attract skiers to its slopes, even subsiding the now defunct Pyrenair.

    Seeing only 6,228 passengers in the whole of 2009, one report stated that each passenger cost the public coffers some 700 euros (£600) and last year its losses amounted to 6m euros (£5.2m).

    The last commercial flight departed in April, the next is not due until January. But the fully staffed airport still attracts visitors – locals drive out to the airport to dine in its air-conditioned cafés and restaurants.

    During the height of the construction boom, authorities rushed to take advantage of low-cost airlines, to plan new airports and open up hitherto unknown regions to northern European tourists.

    But of the 48 regional commercial airports built in the debt-ridden country in less than 20 years, only 11 make a profit.

    As part of a series of austerity measures designed to wrench Spain out of its deep economic problems, Socialist Prime Minister Jose Luis Rodriguez Zapatero promised partially to privatise its airports. Negotiations are still under way.

    Back in Castellón, residents are not at all surprised at the fate of Spain's newest airport.

    "I always thought it was a stupid idea to build one here when we are less than one hour from Valencia airport and I was right," confessed Vicento Bore, a 78-year old pensioner playing cards with friends in the tranquil square of Vilanova d'Alcorea, a village with 700 inhabitants less than two miles from Castellon airport.

    "To think that we were worried about all the noise of suddenly being in a flight path," he laughed. "What a joke."