Crisis Markets, Part 4—The Coast Of Spain: Where Have All The British Gone?
I moved to Sitges, Catalonia, Spain, in 2001. We rented a four-bedroom house with a community pool and gardens in a beautiful urbanization in walking distance of Mediterranean beaches. A house in the same complex was on the market for about 350,000 euro. The area was stable with a small amount of development going on in the hills behind us.
By 2006, every available piece of land, including plots that barely clung to the hillside, was being built on. There were more building cranes on the skyline than TV aerials, construction trucks raced about everywhere, and the sound of building crashed around us. Another house in our complex came on the market mid-2007.
It sold for 540,000 euro. By now the town was heaving with real estate offices with multi-lingual expat real estate agents selling to every European market. Se vende signs were everywhere, on both new and secondhand homes (of owners trying to make a killing on long-held family properties). By the beginning of 2008, things were looking worrying; there were so many empty new-builds, some abandoned. Builders were simply running out of money. The cranes had stopped swinging, and the mood had darkened.
At the beginning of December 2009, one of Spain’s biggest banks, Caixa Catalunya, published a report stating that, in the bank’s opinion, housing prices would not fall any lower. Just a few days later, the property consulting group Aguirre Newman published its report, stating, “The residential property market in Spain has not yet reached bottom and could drop another 27% in 2010.” The Aguirre Newman report went on to explain that property transactions had fallen by around 41% in 2009 compared with 2008 and to warn that bank valuations continued to overestimate the true value of property in Spain. Aguirre Newman was right. Prices continued down through 2010, 2011, and 2012.
The scene on the ground along the coast of Spain today is near-desolation and near-desperation. Massive numbers of properties are available at hugely discounted prices. The average price of real estate in this country has fallen by more than 50% since 2006. In June 2006, the average per-square-meter cost to buy an apartment in Spain was 3,500 euro; in June 2012, it was 1,633 euro.
Spanish banks hold approximately 1 billion euro worth of inventory that they are desperate to get rid of, meaning there are massive savings to be had on the purchase of repossessed real estate, most of which never made it to market. There are whole developments near the sea lying empty, where the builder and/or the developer went bust. Google “repossessed Spanish bank property,” and you’ll get hundreds of matches. The asking prices on most websites are whimsy; vendors know they’re not going to get what they’re asking.
The biggest bargains (and usually best locations) are repossessed new-builds. Santander’s property site Altamira has a two-bedroom apartment in a new development in Estepona for 92,299 euro. Bankia, a group of failed banks, is selling its properties through BankiaHabitat. ServiHabitat the property arm of La Caixa is asking buyers to make an offer on their site.
At a recent property exhibition in London, a company was offering fully inclusive, three-day viewing tours of property on the Costa Blanca and Costa del Sol for £99 (US$160). That includes flight from the UK, hotel, and food. Another exhibitor, Property Repossessions Spain, focuses on the Murcia region of Andalusia (where Paramount Pictures is developing a theme park). They list deeply discounted villas, apartments, and condos, most never lived in and fully furnished, with every amenity included. A two-bedroom, two-bathroom apartment in Pueblo Salinas, Vera, just a 10-minute walk to the beach, is reduced from 294,000 euro to 133,000 euro.
Lucy Culpepper
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