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Could Spain be one of the Best Real Estate Property Investments in 2010?

2010-01-12T11:27:00.001+00:00

By Ronan McMahon

1) In Europe, projects and banks are in deep trouble. The resulting financial distress has created pockets of opportunity where you can buy quality cash-flow property for 50 cents on the dollar.

2) In Costa Rica’s southern zone, a new coastal highway is set to open in 2010 and an airport is on its way. With improved accessibility, property prices here will increase, just as they have elsewhere in the country when better roads have gone in.

3) And in safe, stable, cultured Uruguay, there is an undiscovered stretch of coastline that big international developers have just begun to snatch up. Rich Argentines have been coming here for generations – but keeping the secret to themselves. The best beaches and seaside towns in Uruguay are here. And now’s the right time to stake a claim.

Now let me explain in more detail why…and how, you can position yourself for profits in each.

Grab Distressed Deals in Europe

In Europe right now you can get deals with discounts of 52% on list prices, or 40% on official valuations – deals in blue-chip locations that will immediately throw off positive cash flow.

These are opportunities in locations that will be the first to recover once real pent-up demand recovers. In some cases, up to 100% financing may be available.

After years of market overshoot on the upside, today we see the opposite – overshoot on the downside. You could profit in 2010 on distressed and bank foreclosed properties in Europe. The best deals are in projects that have gone bankrupt.

Here is why this opportunity exists: Banks lent to developers to build. Developers built in anticipation that there would be no problem selling their units. After nearly a decade of runaway demand and floods of cheap money, they took their eye off the ball. Developers took on more debt and risk than they should have and they overpaid for land.

The Credit and financial crises, combined with oversupply, led to a breakdown in many markets. Sales dried up and high-quality, completed units were left sitting, waiting for a buyer. Banks need to purge their loan books. Developers want to lick their wounds and move on. Forced sell-offs are happening…demand is almost non-existent. This is a formula for opportunity.

Distressed deals are available in many places in Europe, though most markets make little sense and I wouldn’t recommend them. In Central and Eastern Europe, for instance, deep structural and currency issues make the deals unattractive.

And in Ireland, there is an oversupply problem. It’s compounded by increased unemployment and an imminent fiscal crisis. Rents in Ireland have fallen by up to 30% in the past year alone. Add in more vacant structures and you see a market that is suffering from yield implosion. With the exception of an exceptional deal on a property with intrinsic value, I wouldn’t recommend Central or Eastern Europe or Ireland.

I’m focused on my three golden rules:

Buy quality (location, construction, amenities, and fit-out).

Don’t take on any construction risk; buy completed units.

Don’t take on any project risk; make sure, for instance, that the condominium is functioning. You don’t want to be one of 10 owners in a 100-unit condominium.

I wouldn’t consider any distressed deal that doesn’t tick all three boxes. So where should you look?

The best opportunities are in the UK, Spain, and Portugal. Developers here relied heavily on debt. The discounts can be big…more than 50% in some instances. The banks who control many of the failing developments will offer mortgages of up to 100% at extremely competitive rates.

In the UK, invest in prime urban areas in cities with a diverse employment base. Look to cities like Birmingham and Manchester. You can buy for less than 50% of what your neighbors bought preconstruction several years ago. Buy into projects where there are a large number of owner-occupiers. These will be more stable.

In Spain and Portugal, invest in prime resort properties in areas that haven’t been overbuilt. There’s a lot of junk out there, which you should avoid. However, the market has stalled for quality inventory, too. Northern Europeans will still come in droves to enjoy the region’s sunny weather, and these folks will still need to stay somewhere. Buy where these tourists want to stay – in places that are close to golf courses, beaches, and an international airport. Places like Granada in Spain or Portugal’s Algarve.

Costa Rica’s Suddenly Accessible Southern Zone

Anything that improves the accessibility of a piece of property increases its value – roads, bridges, airports, etc.

In 1983, IL first recommended Northern Costa Rica. Those who followed IL’s recommendation saw their investments increase 8-, 10- or even 12-fold. Today there is another Costa Rica play. History might just repeat itself.

Prices have stayed low in Costa Rica’s Southern zone because it’s difficult to get to. That’s set to change. If you move fast, you have the opportunity to position yourself ahead of the path of progress.

Some of the most amazing scenery in Costa Rica is in an area that runs south of Quepos to the border with Panama. Landscapes here in Costa Rica’s Southern zone are dramatic – panoramic ocean views; lush tropical rainforest; and sheer jungle-clad slopes, rising sharply away from pristine stretches of sandy beach.

There is more land preserved in national parks and reserves in this region than in any other in Costa Rica. Ballena National Marine Park is a hotspot for humpback whales. Corcovado is reputedly the largest area of primary rainforest left in the Americas, home to numerous endangered plant and animal species. The beaches are mostly deserted.

In a country with an established real estate market like Costa Rica, this sounds like just the type of place that would attract a lot of fervent investors. Difficulty getting there has kept it under the radar in terms of development, and kept prices far lower than areas in Northern Costa Rica.

The Costanera Highway was unpaved between Quepos and Dominical and the airports in this area are small, local affairs. These are exactly the kind of conditions I look for when scouting for a good real estate opportunity. Especially when these conditions are set to change.

Costa Rica’s President Oscar Arias Sanchez recently kick-started the final stage of the Costanera highway. The work is almost complete (only one bridge still remains unfinished). And so a project that’s been promised by successive governments for 30 years is finally on the brink of completion. It will open up a truly undiscovered area of Costa Rica by cutting the two-hour trip from Quepos to Dominical to 25 minutes.

An international airport is planned for Palmar Norte. Due to be completed in 2013 (the government has already allocated funds) the airport is planned to open in stages; the first will allow international flights with a maximum capacity of 50 passengers. Eventually, the plan is to have a runway capable of accommodating even the world’s largest passenger plane, the Airbus A-380.

An airport of this scale needs to be close to a hospital…so they built one. The ultra-modern 85,000-square-foot Hospital De Osa located in the town of Cortez opened in April 2008. The hospital features multiple treatment facilities including a state-of-the-art emergency room, a pediatrics wing, a neurology center, and an obstetrics and gynecology center.

In 2002, in Northern Costa Rica, Liberia airport started taking direct flights from the U.S….and property prices soared. The beaches in this Southern zone are even nicer…and they’re about to be more accessible.

Uruguay’s Secret Beach Hideaway: Rocha

Uruguay rarely makes the headlines. There are no natural disasters and the crime rate is low. It’s safe, stable, and cultured. The infrastructure, from modern airports to roads, is first class.

The country goes quietly and successfully about its business. Last year it made headlines with GDP growth of 8.9%, compared to 1.1% in the States. Uruguay isn’t burdened with debt. Montevideo’s largest shopping mall plans a $100-million expansion, adding to the 200 stores already open.

The department of Rocha in the east of Uruguay has for years been a favorite destination for rich Argentines. East of Punta del Este, it stretches to the border with Brazil and boasts the nation’s best beaches. Inland, you’ll find cattle ranches and sleepy towns, most with populations of less than a 1,000 souls. The coast is where the action is. The beaches here are wide, natural, and pristine. The deep-blue water contrasts with powdery golden sands. You won’t find highrises or all-inclusive resorts.

What you will find are Uruguay’s best seaside towns. La Paloma fills with tourists in high season, but it’s still a small, friendly beach town. La Pedrera has an upmarket feel to it, with large weekend homes beside a sweeping curve of beach. Cabo Polonia is famous for its shifting sand dunes and bohemian residents.

There’s an abundance of nature reserves and parks in Rocha, many with lagoons ideal for bird-watching enthusiasts.

Rocha’s seacoast draws visitors from Uruguay, Argentina, and Brazil. And this stretch of coast has recently appeared on the radar of major international developers. They have been quietly purchasing large tracts of land. Land values have been slowly increasing. Now they are set to explode. This stretch of coast is the natural extension of Punta del Este.

One planned project I recommend is by Argentina’s foremost developer, Eduardo Costantini. Estimated costs for his development run to $350 million. This is the first upscale project in the area, and it will raise the bar for quality and luxury. Included in his project is a bridge over the lagoon at Rocha. U.S. development groups also are getting ready to launch projects in this area.

Buy accessible beachfront land along Rocha’s coast, and you will do well.

Story From Daily Reckoning... http://bit.ly/5Q51NA

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Interntional Property Investors - Check this Out...

2009-10-14T09:32:00.000+01:00

London house prices will jump nearly 40% by 2014

London will escape falling house prices next year while the rest of the country faces a setback in the values of most properties.

According to estate agency Knight Frank, house prices will end this year 2% higher than they were at the beginning of the year led by the recovery in London and the South-East. But the agency predicts that throughout next year prices will fall 3% nationally — the classic “W”-shaped recession — although London will continue to grow with prices rising by 3% next year and by 9% in 2011. Five years out, by 2014, London prices will be 38% higher than today while the national gain will be just 19%.

Knight Frank's head of residential research Liam Bailey said: “We believe that the future improvement in market conditions will continue to be led from London and southern England, particularly from the higher price brackets. Strong demand from UK and international buyers will ensure that the central London property market in particular will continue to outperform in 2010.

“The key reasons for our confidence with regard to this market are: uniquely in the UK — London will benefit from the global economic recovery, which is likely to considerably outpace that seen in the UK; sterling is set to remain relatively weak into the medium-term, encouraging international demand; the economic prospects in central London are brightening more rapidly than elsewhere in the UK.”

Bailey pointed out that prices have fluctuated in London more dramatically than in the rest of the country with a two-year rise of 60% in the two years to March 2008 followed by a fall of 24% over the next 12 months.

His comments coincide with a report from the Royal Institution of Chartered Surveyors which says that a lack of supply continues to underpin the house-price recovery. It said the net balance of surveyors reporting house-price rises rather than falls reached a positive reading of 22 in September, the highest figure since May 2007.

The closely watched sales-to-stock ratio — a measure of market slack and a lead indicator of future prices — edged upwards a little further. It has now risen for nine consecutive months and stands at 29, its highest level since December 2007.

“A lack of supply is still underpinning the rise in house prices,” the institute's spokesman Ian Perry said. “Despite the problems first-time buyers are continuing to encounter in securing finance, the level of inquiries from potential purchasers is increasing. This imbalance between demand and supply suggests that house prices will move higher in the near term,” he added.

Knight Frank's Bailey said that nationally next year would see weakness but “not Armageddon”. He said: “It would be wrong to expect a continuation of the current rapid recovery in the housing market — the economy is not in a position to permit this in the short-term. Similarly, it would be wrong to expect carnage.”

Story From Evening Standard... http://bit.ly/16NxRu

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The British are starting to buy again in Spain

2009-10-10T18:26:00.002+01:00

The hoped-for green shoots of the economy in the UK were showing their heads in Birmingham last weekend:

The hoped-for green shoots of the economy in the UK were showing their heads in Birmingham last weekend, when thousands of people turned out for the “A Place in the Sun” exhibition held at the NEC. International property shows in the UK had been in the doldrums over the past months and some of the organsisers had gone into bankruptcy owing to the overall downturn in property sales everywhere, but “A Place in the Sun”, backed by the TV_programme of the same name, made a strong come-back at the NEC. The exhibition was a smaller one than in previous editions but had been well publicised, and visitors came flooding through the doors.

This was especially good news for Spain, confirmed to be the favourite destination of potential property-buyers. No fewer than 60 per cent of visitors indicated an interest in Spain, with France coming in a poor second despite its familiarity and geographical proximity to British buyers. Unlike in previous years, there was no “French village” area at “A Place in the Sun”, and Spain’s main competitors were the USA and Australia and New Zealand, which were offering immigration packages.

Surveys of the public attending the show indicated that many buyers have been waiting for the right moment, and are now ready to make the move, as prices are unlikely to drop any further. Asked why they were looking at Spain, they mentioned, as one would expect, the climate, the friendly people, and enjoyable holidays in this area in the past. Buyers were also aware of the problems now facing investors who had opted in the past for destinations less well served by the airlines. While flights to many of these have been reduced or scrapped altogether during the credit crunch, Malaga airport continues to be served by numerous airlines with dozens of flights every day to the UK.

Seminars

A programme of seminars accompanied the exhibition, dealing with such subjects as how to get a visa to move to the USA, fractional ownership of property, and “Has the market hit rock bottom?” The consensus on the last question was that although it is impossible to tell how low prices will fall, or predict when the market will pick up again, until the worst is over and the market is showing signs of growth, in most areas there is unlikely to be a better time to buy than right now.

The most popular of the seminars however was on the subject of “Emigrating to Europe”, with six talks over the course of the show commanding audiences much larger than anticipated. It was standing room only for many who wanted to hear advice and ask questions about relocating to another European country.

The seminars were conducted by a property journalist, the speakers being an international lawyer and an expert from the Foreign and Commonwealth Office, Stephen Jones, whose wide experience derives partly from his current position as British Consul in Malaga. His advice was wide ranging, from questions of vehicle licensing to health insurance, tax liability and transfer of British pensions abroad. He strongly recommended that new residents in Spain should register with the local “padrón” and that they try to learn some Spanish before making the move, in order to facilitate life in Spain and enjoy all that it has to offer. He was also insistent that before buying, it is advisable to rent for a few months to make sure of the suitability of the chosen location. Enthusiastic to the point of proclaiming Benalmádena to be his favourite of the many places he has lived, he reiterated the advice to anyone else thinking of living here to “do your homework before you come”,

SUR in English

SUR in English published a property supplement for the “A Place in the Sun” exhibition, which was also distributed to readers in Spain inside last Friday’s edition. Distributed to all visitors from our own stand at the show, it flew off the rack, often into the hands of visitors who were already well acquainted with the newspaper from visits to southern Spain or through the online version. It was clear from their comments that these were serious buyers, who had come to the show to learn more about property buying in their chosen area.

SUR in English conducted its own survey to find out what the chosen areas were. Some visitors were interested in being near the sea, but there was a marked lack of interest in the big new developments on the coast, and buyers had heard of the Coasts Law and its prohibition of buildings close to the shore. All were aware of the bad press Spanish property has had recently in the UK, where the media have reported extensively on cases of corruption, problems with zoning, land grab and failed developers, but their attitude generally was that they were seeking information in order to avoid falling into any of the traps, and were undeterred in their search for their own place in the sun.

Taken from Sur in English... http://bit.ly/XDYC0

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Landlords In Spain Get New Protection Availability

2009-10-02T09:50:00.001+01:00

Spanish property investors must repel pirate tenants

There has been a substantial increase in Fly to Let landlords in Spain experiencing problems with bad tenants and the eviction process due to ‘pirate tourism’ according to Paragon Advance España.

The company, which is part of the Paragon Advance group which offers tenant referencing and rent warranty in Spain, says research shows that defaulting tenants and evictions have tripled in the past two years as owners look for a solution to create income by letting their property as an economic alternative to hotel accommodation or resort to long term lets to locals.

Bryn Cole, Managing Director of Paragon Advance España who have offices just outside Marbella, the Costa del Sol and Madrid, said: “The majority of expats living in Spain have opted to retire there and are living either off their English savings or pensions.

The effect of the recession has hit them through the weakness in the pound and the dramatic fall in interest rates, meaning that a person who is paid a pension in the UK and then has to convert it, has seen it fall dramatically, giving them less money to cope with a far more expensive cost of living than it was six months ago.

“Owner occupiers are now moving back to the UK and being forced into letting out their homes in order to be able to pay the mortgage and, for those investors who jumped on the Spanish property market, buying off plan, only to see it go into freefall before they could offload their investment, they have had their fingers burned and are having to let long term and ride it out.”

Many expat landlords are unaware of the different mechanisms in place to secure rental income and often fail to implement them in their rental agreements which can leave them unprotected if the tenant does not, or cannot, pay the rent.

In order to assist these landlords, Paragon Advance España offers a rent protection and legal expenses warranty which offers a standard loss of rent cover for up to €2000 per month for up to six months cover, although rents of over €2000 can also be covered, and legal expenses cover up to €15,000.

By using the route of arbitration, the timescales involved are dramatically reduced as Javier Iscar de Hoyos, General Secretary of the European Association of Arbitration (AEADE) explains.

He said: “It can take around 18 months through the usual law system and, in the meantime, the landlord still has to pay the mortgage, utility bills and has no redress over the defaulting tenant during this time. If the landlord should refuse to pay and, for instance, the electricity is cut off, the tenant can prosecute the landlord.

“We have invested time and effort in ensuring that a more specialised system of arbitration takes root in society, providing fluidity, security and trust in contractual relationships between landlords and tenants.

“More than 80 percent of proceedings dealt with in 2008 were from the property sector in which the number of arbitration cases rose by 83 percent. During this time, the average dispute resolution took less than four months.

“With regard to tenancy arbitration, thanks to the special system created by AEADE to facilitate disputes in that sector, the time frame was limited to an average of 25 days, with more complex cases being resolved within six months.”

Taken from FCC Paragon... http://bit.ly/1axu67

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Global recovery has begun - IMF

2009-10-02T09:25:00.000+01:00

By Lesley Wroughton
ISTANBUL (Reuters) - The International Monetary Fund on Thursday declared that a global economic recovery had begun led by Asia, also cautioning that the strength of the rebound depends on a rebalancing of world growth.

After a year of being downbeat about prospects for the world economy, the IMF's latest World Economic Outlook revised up its forecasts, projecting a stronger rebound next year.

"The recovery has started. Financial markets are healing and in most countries growth will be positive for the rest of the year as well as in 2010," the IMF's chief economist Olivier Blanchard told a news conference before the start of World Bank and IMF meetings in Istanbul.

The Fund now expects world output to contract by 1.1 percent in 2009 before growing by 3.1 percent in 2010. This is more upbeat than its last outlook in July when the Fund projected the world economy would shrink 1.4 percent in 2009, before expanding 2.5 percent in 2010.

Blanchard said at his news conference that the strength of the world economy will depend on rebalancing global growth, an issue that was the focus of a summit of leaders from the Group of 20 advanced and developing nations in Pittsburgh last week.

"If you think about global rebalancing you realise it is going to have to come from a number of measures and from a number of adjustments. It is very hard to see how this could happen at the current exchange rates," he said.

"In general, it is very hard to see how global rebalancing does not come with an appreciation of Asian currencies of various degrees," he added, without mentioning China's currency, the yuan, which the IMF has said is substantially undervalued.

Rebalancing the world economy will require debt-laden countries including the United States to save more and buy less, and big exporters like China to increase domestic spending. Such a process would almost certainly require an even weaker U.S. dollar and for the Chinese renminbi to rise.

In an interview with Reuters Television, Blanchard also said that rebalancing global foreign exchange rates was not just about adjusting the level of the Chinese currency.

"I've focussed on China because it is an obvious component of the solution, but this is not a Chinese problem, it's a world problem," he added, declining to give specific levels for either the yuan or other currencies.

The IMF report said the global economy will take a while before it returns to pre-crisis levels, with growth expected to average a little more than 4 percent a year after 2010.

The Fund said it saw both the United States and the euro-area returning to positive, albeit slow, growth next year.

EMERGING COUNTRIES LEAD

Emerging and developing countries are the front runners in this recovery, expanding by 1.5 percent this year before rebounding 5 percent next year led by China and India, the IMF said, also noting signs of stabilization in Latin America.

The IMF revised up China's growth forecast for next year to 9 percent from a July estimate of 8.5 percent.

Overall, it said downside risks to growth are receding but are still a concern. The greatest risk was that countries disrupt the recovery by withdrawing supportive measures too soon.

It said governments should stand ready to roll out new initiatives if risks to growth materialise, even if it means racking up higher levels of debt.

But Blanchard said fiscal support could not go on forever and as governments consider exit strategies, they should also commit to large reductions in deficits.

The challenge going forward is to map a middle course between unwinding stimulus measures too early and leaving them there too long, which could damage government balance sheets.

"If the recovery was truly to falter, if private demand was really to pick up, and global rebalancing were not to take place, then this might be a very strong incentive for governments to have large fiscal deficits and run debt to very high levels," he added.

In major economies, authorities can still afford to maintain accommodative conditions for a while because inflation is likely to remain subdued, the IMF said.

In emerging markets, raising interest rates may happen sooner, the IMF said, although warned that in some countries warding off risks of new asset price bubbles may require greater exchange rate flexibility.

Meanwhile, a Turkish student, who is also the editor of a small left-wing newspaper Birgun, threw a shoe which landed at IMF Managing Director Dominique Strauss-Kahn's feet on Thursday as he made a speech to students in Istanbul.

The incident echoed that of an Iraqi journalist who last December hurled his shoes, a grave insult in the Muslim world, at then U.S. President George W. Bush.

(Additional reporting by Daren Butler, Nick Edwards and Selcuk Gokoluk; Editing by Andy Bruce/Victoria Main)

From MSN Money... http://bit.ly/xBw8L

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Spain raises taxes to tackle deficit

2009-10-01T08:50:00.000+01:00

Spain's Socialist government has unveiled tax increases designed to raise an extra €11bn ($16.2bn, £10.1bn) a year and cut a budget deficit swollen by the economic crisis. But it failed to convince opponents that the measures would be enough to rescue the public finances.

Before the summer, ministers insisted Spain did not need drastic tax increases. But on Saturday the cabinet bowed to the inevitable and approved what it called an "austerity" budget for 2010, outlining spending cuts and increases in income tax, value added tax and the tax on capital gains and interest income.

The budget prepared by Elena Salgado, finance minister, abolishes a €400 annual tax rebate granted only two years ago. That was near the end of a housing-driven economic boom that had allowed José Luis Rodríguez Zapatero, prime minister, to say even the left could reduce taxes.

From July next year - by which time the government hopes an economic recovery will have begun - the main VAT rate will rise two percentage points to 18 per cent, while a lower band for restaurants and hotels will rise one point to 8 per cent. The rate for basic food items will remain unchanged at 4 per cent.

The government has highlighted the new tax rates on unearned income - up 1 percentage point to 19 per cent, and up three points to 21 per cent for annual earnings above €6,000 - to suggest they are targeting the rich and not the middle classes.

"Those with the most should make the biggest contribution," said Ms Salgado, who also announced a tax cut for small businesses that maintained or increased the number of their employees.

However, the unearned income tax rise is expected to bring in just €800m a year, less than a tenth of the budgeted extra revenue, and other political parties whose support the government needs to pass the budget were unimpressed.

Joan Ridao, of the leftist Catalan party Esquerra Republicana, called the budget "erratic, improvised and unrealistic".

On the right, Mariano Rajoy, of the main opposition Popular party, said the budget was a recipe for more unemployment, more deficits and more taxes. "He [Zapatero] continues to lie to us, just as he did when he said there was no crisis," Mr Rajoy said.

Story from The Financial Times... http://bit.ly/3P3Kuh

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DO new homes or resales offer the best value abroad?

2009-09-28T09:08:00.000+01:00

DO new homes or resales offer the best value abroad? PETER SWAIN has a look into where good deals can be found.

Strictly Come Dancing devotees will recognise ‘slow, slow, quick, quick, slow’ as the rhythm of the Tango.

Over recent years, buyers hunting for a home abroad have been dancing to a similar tempo. Up until 2007, with prices racing ahead, there was a hectic quick burst; now we’re in a slow period.

‘Costa del Crunch’ style headlines suggest there should be bargains out there, especially in Spain and Florida. But unearthing good-quality property in the right location, at the right price, is another matter.

So, to find good value for today’s dollar or euro, is it better to stalk discounted new homes or should buyers track down cheap resales; properties on developments already sold to private buyers but now back on the market?

According to Reuters, house prices in Spain have fallen 32 per cent from their 2007 peak.

Despite this, “until the beginning of 2009, developers had their heads in the sand and were refusing to discount,” said Barbara Wood of The Property Finders, which helps buyers locate their place in the Spanish sun at the appropriate price.

“Even now, they don’t want to advertise reductions on their websites,” added Ms Wood.

“But for quality property in good locations like Sotogrande and Marbella, I now look for a 30-40 per cent discount on peak prices.

“You can get 60 per cent off some apartments but I wouldn’t advise it. Bad location, inadequate infrastructure and

oversupply may make them unsellable in the foreseeable future.”

Rather than bartering with builders, Ms Wood believes the best deals in Spain are currently in resales.

“Two years ago, £300,000 would only get you a cookie-cutter square box in a bad location. Today, that buys a quality resale property right on the front line.”

The advantage of a resale on an established resort is what you see is what you get. “If you buy on an unfinished development with further phases planned, you could be living on a building site for years,” Ms Wood warned.

“Promises of future golf courses, supermarkets and tapas bars should be treated with extreme caution.”

Some resale properties may be a little tired but others, bought by investors off-plan expecting to ‘flip’, or resell before completion, may never have been lived in.

James Stewart of Savills is selling just such a four-bedroom villa in Sotogrande for €850,000, down from €1.4 million.

“Prices are back at 2003 levels. Right now there is terrific value in Spain.”

A distressed seller, however deserving of sympathy, represents an opportunity for a bargain-hunting buyer.

“I spend a lot of my time investigating why something is for sale, finding out the back story, to give my clients the best chance of getting a great deal,” explained Ms Wood.

But even in the developer market there are real opportunities.

“A frontline beach property at San Pedro, close to Puerto Banús, was originally on the market for €715,000,” said Ms Wood.

“The two-bedroom penthouse, with a roof terrace and hot tub, is one of only 36 apartments in a gated community. The developer will now consider offers of €360,000.”

Good deals aren’t confined to Europe. The price crash started in the US, where the annual rate of house building is currently at its lowest since records began in 1959.

Florida has been a bloodbath. June’s $105,000 average price for resale condos (apartments) marked a 52.1 per cent decline from the $219,000 peak in July 2006.

Orlando-based Gary Kenny is a developer and estate agent, so well placed to gauge the market.

He said: “We’ve sold 220 of the 290 condos at our Tuscana development in Champion’s Gate but to sell the rest I would have to accept a price I can’t afford.”

The Tuscana website advertises two-bed apartments for $360,000.

“I might sell them for $250,000 cash but the nearby competition is selling for $150,000,” said Mr Kenny wearily.

“Luckily we have understanding banks so we’re renting them.”

Builders in central Florida are competing against the foreclosure market, which currently accounts for more than 40 per cent of transactions, according to the National Association of Realtors.

Mr Kenny said: “When people walk in the door, their first words are ‘bank-owned property’ and ‘foreclosures’.”

He warns buyers against the very cheapest bargains. “You can buy condos for $60,000 but the Home Owners Association, which takes care of insurance and maintenance, is probably broke.”

In Florida, buyers can instantly see a record of when a property was built, when it was put on the market, at what price and by whom, so the market is more transparent than the Spanish.

New and resale property compete side-by-side at similar prices. With a 10-month supply of foreclosure property, prices could remain depressed for a while. In any market, the financial position of an individual developer is key.

Aphrodite Hills in Cyprus was successfully launched nine years ago. The 650 villas and apartments, five-star hotel and spa, and best golf course on the island, have been a winning formula.

With relatively few units left to sell, the developer doesn’t need to drop prices much, so anyone expecting to haggle huge chunks off their latest offering, Theseus Village, where apartments cost between €412,900 and €765,000, and villas well over €1 million, may be disappointed.

But among resellers on Aphrodite Hills, especially those returning to the UK and converting their euros back into sterling, there is more price flexibility.

“When comparing like for like, there are discounts of 15-20 per cent on the table for resales,” said Pauline Gallagher of local agent, Unique Living, which is selling a two-bedroom resale apartment in Theseus Village for €529,500.

Smaller developments in Cyprus have been forced to discount more heavily.

“Prices on two-bedroom apartments built by smaller developers in Paphos, just 17 kilometres away, are 30 per cent off their peak,” said Peter Cooper of Signature Properties.

If singer Peter Andre of Cypriot extraction, decides to downsize from his multi-million-pound holiday home near Larnaca, following his much-publicised divorce from Katie Price, this would be a good time to find a bargain.

So, particularly with resales and even on new developments abroad, there is terrific value.

But in the current turbulent market, local knowledge has never been so important.

Story from Daily Express... http://bit.ly/19qohB

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Sterling descends and Bank of England Governor helps to talk it down...

2009-09-25T10:25:00.002+01:00

Sterling slumped to its lowest level against the euro in more than five months after Mervyn King, the Governor of the Bank of England, appeared to back a weak UK currency and reiterated concerns about the prospects of Britain’s recovery.

Speaking to The Journal, the Newcastle newspaper, Mr King said that the significant decline in the value of sterling in recent months “will be helpful” in rebalancing Britain’s economy by helping to boost exports.

His comments sent the pound down by 2.1 per cent against the dollar to $1.6066, and by 1.5 per cent against the euro to €1.09. The market interpretation was that Mr King was comfortable with the falling pound, despite a decline of almost a quarter against other major currencies in the past two years. Sterling was hit further by renewed speculation that the central bank may cut the rate it pays on deposits to financial institutions, in an attempt to stimulate the economy by forcing them to lend more money.

Mr King said: “What we need to see now is a shift of resources into net exports — whether directly or in producing things that compete with imports.” He continued by expressing the cautious optimism that has characterised his recent statements on Britain’s fragile recovery. “Output has stabilised. There are some signs that growth may be beginning to pick up. But we shouldn’t get too carried away by this,” he said. “This is clearly very small growth after a very large fall, and unemployment has risen.”

David Buik, of BGC Partners, the broker, added: “I hear what Mervyn King’s saying about the weak pound being good for exports, but our manufacturing output has been terribly neglected. A fall in the pound will help things, but it’s going to be a long haul.”

Meanwhile, in an interview for the BBC Two documentary The Love of Money, Mr King revealed that two UK banks came within hours of collapse last October. He said the fall of Lehman Brothers in September last year froze credit markets and pushed Royal Bank of Scotland and HBOS to the limit on October 6 and October 7.

“Two of our major banks, which had had difficulty in obtaining funding, could raise money only for one week, then only for one day, and then on that Monday and Tuesday it was not possible even for those two banks really to be confident they could get to the end of the day.”

He continued: “Individuals would not have had access to the money in that bank. Their deposits would have been frozen. The accounts would have not been there for salaries to be paid ... In turn, they wouldn’t have been able to pay bills to businesses, so the businesses would have found that their flow of payments would have come to an end.” The Government pledged to put about £50 billion into the banking system on October 8, helping to stave off a meltdown.

Story from The Times... http://bit.ly/401rwt

Related Links From The Times:

Pound slips on Bank of England warning... http://bit.ly/11OWVb

Bank says recovery could prove a false dawn... http://bit.ly/wJttB

http://www.bargainqualityhomes.com/ For Marbella Villa and Luxury Property Bank Repossessions and Distressed Property Homes direct from owners...

Is the Spanish Housing market on the Road to Recovery?

2009-09-25T08:05:00.003+01:00

The gloomy report mentioned in my last article notwithstanding, there is increasing talk in the Spanish press about an incipient recovery in the housing market, largely based on some statistics suggesting the collapse in sales might be bottoming out. Beatriz Corredor, Spain’s Minister of Housing, says you can now buy with “no worries”. Is she right?

First of all, what evidence is there the market has touched bottom?

1. Spanish property prices are bottoming out, suggesting that the market is approaching a corner, according to the latest report from Tinsa, an appraisal company. The problem is, do you believe this data? It smells fishy.

2. According to Pedro Pérez, president of the G-14 group of Spain’s biggest developers, new sales contracts (pre-sales) stabilised in the second quarter, after 2 years of continuous falls.

Pre-sales “could have touched bottom” says Pérez, but he also concedes that sales are still feeble.

That said Metrovacesa, one of Spain’s biggest developers, and a member of the G-14, reports pre-sales up 82% in the first 6 months of this year compared to the same period last year. Good news? Yes, but in revenue terms results were almost the same as last year’s low, thanks to declining prices.

Other developers in the G14 report that sales are being made (which, in itself, is a big improvement on last year), mainly thanks to discounting.

3. The collapse in Spanish property sales appears to be running out of steam, according to the latest monthly sales figures from the National Institute of Statistics (INE). There were 33,694 home sales in July (not including social housing), the biggest monthly sales figure this year, and only 19.6% lower than the same time last year.

And according to figures from the Ministry of Housing, home sales in the second quarter were 8% higher than in the first, as the market display signs of life. “The impression we have of the property market is one of paralysis, but in the last 12 months almost half a million homes have been sold,” Corredor is quoted as saying.

Corredor also argues that, thanks to lower property prices and lower interest rates, housing affordability has improved dramatically in the last year, meaning that people can now go ahead and buy “tranquilamente”, which I would translate as “with no worries”. Housing affordability has improved from 40% of gross household income in the second quarter of last year to 31% now, according to figures from the Bank of Spain, reported in the Spanish press. “With low interest rates and mortgages that allow them to live comfortably, without stress at the end of the month, families can now go ahead and buy a home without any worries,” was how Corredor put it (my translation).

Premature optimism

But The Spanish Mortgage Association (AHE) says it’s “still too soon to talk of a recovery” in a new report just released.

Whilst noting a recent upturn in sales, which it attributes to improving housing affordability driven by lower interest rates , the report worries that the improvement in affordability may run out of steam, as interest rates are now almost as low as they can go. That means, looking forward, greater housing affordability will have to come from a “prolongation in the adjustment in prices” and an economic recovery that creates jobs and lifts consumer confidence.

But right now, Spain’s economic recovery is still just a twinkle in Prime Minister Zapatero’s eye.

Story From Mark Stucklin... http://bit.ly/mmp29

http://www.bargainqualityhomes.com/

Weak sterling will deliver UK surplus

2009-09-23T08:40:00.000+01:00

Britain is to transform itself from chronic over-spender to a global surplus country as the weak pound revives its export industry, according to a report by Goldman Sachs.

By Ambrose Evans-Pritchard

Goldman Sachs issued an alert advising clients to build up sterling positions Ben Broadbent, the bank’s UK economist, said the 20pc slide in sterling over the past year was “enough to push the UK’s current account into comfortable and permanent surplus”. Britain has not had a durable surplus in living memory.

The bank issued an alert yesterday advising clients to build up sterling positions. It said the economy was in better shape than it looked, with public debt likely to peak at under 80pc of GDP — lower than Germany and France.

UK faces a tough 2010, CBI warns “The UK data continues to exceed the Bank of England’s projections on the upside. We expect interest rates to rise from next spring,” said the bank’s currency team.

The economy is already expanding at a 2pc annual rate and inflation is proving “sticky” compared with Europe. Goldman expects the pound to strengthen by about 8pc to €0.84 over the next three months. It closed yesterday at €0.9035. This contrasts with warnings from BNP Paribas that sterling is on the cusp of another crash, with euro parity in sight by early next year.

The currency markets have been rattled by the Bank of England’s quarterly bulletin, which suggested that sterling may have suffered long-term damage during the financial crisis. The Treasury estimates that 5pc of the country’s economic base has been permanently lost.

Mr Broadbent said the UK’s public finances were in a “dire state” with a deficit near 13pc this year and next, but the lesson of fiscal retrenchment in the early 1990s was that a weak currency can bring swift recovery in a very open economy. “It would be risky to bet against the same happening again. The foreign exchange markets are discounting a lot,” he said.

Goldman said investors had exaggerated the currency risk faced by UK banks from the credit crunch. They also punished sterling this year because a high share of Britain’s overseas assets are in equities, but this no longer makes sense as global stock markets recover strongly.

Story by Telegraph... http://bit.ly/1iW0qU

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Spanish Housing Sector Correction Bottoming Out - Government

2009-09-20T09:18:00.000+01:00

MADRID -(Dow Jones)- The sharp housing correction that has sent Spain's economy into a tailspin is bottoming out, Housing Minister Beatriz Corredor told parliament Wednesday.

"Recent indicators show a trend toward stabilization in the housing market," Corredor said.

Spain's once-buoyant housing market collapsed last year as the global financial crisis worsened a correction that was already underway after years of overbuilding and spiraling house prices.

Data Tuesday from Spain's national statistics institute showed the number of houses sold in Spain rose 4.7% in July, their third consecutive month-on-month gain, though they were down 20% from July last year.

Falling housing prices and interest rates are helping to improve the affordability of housing, Corredor added, saying this should stimulate demand.

The government has offered incentives to convert unsold homes into rental properties or to sell them to qualified buyers in social-housing programs. It has also said it will limit current tax incentives on home purchases from 2011 in an attempt to bring forward decisions to buy.

In a note to investors Wednesday, Citigroup economist Giada Giani said the rise in July home sales in Spain points to an improvement in housing demand, but noted that housing construction indicators continue to "decline sharply, depressed by the huge amount of unsold inventories."

-By Jonathan House, Dow Jones Newswires; +34 91 395 8121; jonathan.house@ dowjones.com

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Now is best time to buy a home, say six in 10

2009-09-20T09:10:00.000+01:00

Around 58pc of people think it is currently a good time to purchase a home, compared with only 19pc who think it is a bad time, according to the Building Societies Association.

Consumers now expect house prices to rise by an average of 1.6pc during the coming 12 months, with 61pc of people expecting a price rise and only 15pc anticipating a further fall, down from 27pc who expected the correction to continue in June.

Halifax: house prices highest of 2009 The BSA said the recent run of positive data on the property market, which has seen most of the major house price indexes report price rises, was likely to have boosted people's confidence.

The latest findings are a far cry from when the same research was carried out in September last year, when only 34pc of those questioned thought it was a good time to buy a house, with people predicting that prices would fall by an average of 8.4pc during the coming year.

There is also a perception that the availability of mortgages has improved, with 49pc of people still citing this as a barrier to home ownership, down from 57pc last year.

A lack of job security continues to be the biggest factor stopping people from buying a house at 58pc, followed by raising a big enough deposit at 52pc, while 39pc of people are worried about being able to afford their monthly mortgage repayments.

Paul Broadhead, head of mortgage policy at the BSA, said: "It is clear that home buyers are increasingly viewing the property market in a positive light as confidence increases in the market.

"The majority of respondents believe now is a good time to buy. With mortgage availability perceived to be increasing, prospective buyers are more confident of securing funding to purchase a property."

Story from The Telegraph... http://bit.ly/1BuFm4

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Is a Property only worth what somebody is prepared to pay for it?

2009-09-16T15:09:00.000+01:00

How Should Residential Property Be Valued And What Is Market Value Based On?

How Should Residential Property Be Valued?

In the past couple of weeks I have received a number of emails from distressed sellers who are complaining that valuations given by estate agents on their homes are not being realised in sales and they are left feeling dejected after their homes have been on the market for over 12 months.

The home sellers are refusing to take offers that are slightly lower than the asking price because they believe the estate agents have factored in recent house price drops into their valuations and of course they are telling them the housing market is recovering.

So why are the houses remaining on the market for over 12 months?

Well most valuations given by estate agents are based on a small drop from 2007 peak (Up to 30%) when the floodgates to credit were wide open.

In 2007 you could get a 125% mortgage with no deposit and very little in the way of proof that you could pay it back but now the floodgates have been well and truly shut and the credit tap turned off.

Estate agents are still valuing houses as though there is some magical credit supply about to turn back on, which is not going to happen anytime soon. Actually once quantitative easing has run its course the and the banks have run back to the guilt (spelling is intentional) auctions and their vaults once again look empty then the credit supply will tighten even further.

So how should estate agents value houses to regain reasonable turnover of properties?

Estate agents should look at the average wage in their locality and then work out what kind of deposit is achievable given that you need a 40% to gain a decent mortgage rate that disincentives renting in the given area.

The deposit should be based on savings of disposable income and not from the bank of Mum and Dad which is both morally questionable and unsustainable as a source for deposits given the current economic climate.

It is not good enough waiting and hoping that some cash rich buyer from outside the area is going to walk through the estate agency doors waving a huge wad of cash every couple of weeks, a sustainable stream of completions is required to keep business afloat and keep sellers happy.

The question that keeps coming up is "A house should be valued at market value" and that is correct but when a market has nearly all but broken down market value should be based on what buyers in that vicinity can afford.

Story from The Economic Voice... http://bit.ly/2dr7os

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Britons take up educational holidays rather than 'fly and flop'

2009-09-16T06:36:00.000+01:00

Voyages of discovery are becoming the latest travel trend as soaring numbers of Britons choose educational holidays instead of simply lying on a sun lounger by the side of the hotel pool, according to a report.

Britons give up the 'fly and flop' holiday in favour of educational breaks Photo: Reiner Riedler/ Fake Holidays

Breaks designed to acquire new skills like learning to dance the tango, cook exotic meals and take expert photographs are enjoying a significant growth in popularity, the research found.

Rather than a holiday being a fortnight of rest and relaxation, market research analyst Mintel has found an increasing number of Britons are seeking breaks that engage their minds, and not just rest their bodies.

Schizophrenia and manic depression: new link that could help millionsMore than a third (36 per cent) of adults believe that educating themselves about the place they are visiting is an important part of the holiday experience.

One in five adults (20 per cent) enjoy learning new skills on holiday, while in the past three years alone, six in ten adults have visited a museum whilst on their travels.

Mintel's senior travel and tourism analyst Tom Rees said: "As odd as it may seem to those that jet away simply seeking sun, sea, sand and sangria, long-term trends show that a growing number of UK holidaymakers are turning away from fly and flop holidays.

"Factors such as the increasing number of specialist products, more active styles of holiday-taking, the internet and the expansion of low-cost air travel have created demand for new destinations and novel experiences.

"Learning holidays are tapping into the travel zeitgeist for the 'real thing'. Learning to Tango in Buenos Ares or to cook Vietnamese in Saigon offer a 'double whammy' of intense local flavour and allows people to take their hobby to the 'next level'.

"Group-based learning holidays also have a strong appeal to the growing singles population, especially for female travellers. Meeting others with shared values and interests will be a key driver in future years, and online social networking will play an important role in organising learning events and trips."

The research finds consumers participating in a broad range of activities whilst on holiday. An estimated 7.1 million adults (11 per cent) have learnt a sport or game on holiday in the past three years, while 4.6 million (9 per cent) have learnt a language, 6.6 million (13 per cent) have learnt a new skill, and 3.1 million (6per cent) have attended a course. Three of the fastest-growing segments in this sector are photography holidays, cookery holidays and dance holidays.

Story from The Telegraph... http://bit.ly/XkHOg

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Unemployment rises in Spain, home sales fall

2009-09-14T08:16:00.000+01:00

A total of 84,985 people were added to jobless rolls in August, following three consecutive months of declining unemployment, putting the total number of people without work in Spain at 3.6 million.

The number of people without jobs has risen by 1.09 million, or 43.44 per cent, in the past 12 months, the Labour and Immigration Ministry said on Wednesday.

Unemployment rose in all sectors, especially in services, with 47,805 more job losses, followed by construction, with 20,400, and manufacturing, with 11,471.

Another 6,462 foreigners lost their jobs, bringing the number of unemployed non-citizens to 488,570.

The employment figures for the province of Malaga showed an increase of 3,132 or 2.8 per cent, also after three consecutive months of decline.

The Spanish government blamed the rise in unemployment on the fact that seasonal contracts expired at the end of a summer when tourism "has not reached the levels of previous years" and there was less hiring to begin with.

The Property Registry Association said, meanwhile, that home sales totaled 100,850 in the second quarter, off 33.9 per cent from the same period in 2008.

Sales were down 8.45 per cent, compared to the first quarter, the association said.

During the April-June 2009 period, 55,300 new home sales, down 12.57 per cent below the level in the previous quarter, and 45,550 existing home sales, off 2.88 per cent from the first quarter, were registered.

At the end of the second quarter, the average mortgage amount per dwelling was 131,105 euros or 4.34 per cent less than in the previous quarter.

The real estate industry started contracting sharply in 2008 after serving as the engine of Spain's economy for several years.

Story from Sur In English... http://bit.ly/2llIRX

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Maybe Spanish Property isn’t that over-priced after all?

2009-09-12T11:16:00.001+01:00

Spanish property prices bottoming out says leading index

Spanish property price index from Tinsa

Residential Spanish property prices fell by 8.9% over 12 months to the end of August, according to the latest Spanish property price index published by Tinsa, one of Spain’s leading appraisal companies. If these figures are accurate then the rate of decline in Spanish property prices has bottomed out at around 10%, as shown in the graph above.

Once again, coastal areas were the hardest hit, thanks to the number of holiday homes on the coast. Average prices in coastal municipalities fell by 10.3%, but there is a clear trend towards prices bottoming out in these areas. Annualised price declines have been getting smaller every month since April, when they reached 13.5%.

Assume Tinsa’s figures are correct, and average prices have fallen 13% in the last 2 years. Does that mean that Spanish property is now good value (looking at the country as a whole, not just the coast)?

Not really. Between August 2001 and this August, average Spanish property prices rose by 94%, that is they almost doubled. How could people afford to buy property when prices were far outstripping incomes? The answer is easy mortgage credit. Relative to Spanish incomes, property is still over priced, at least as far as this index is concerned.

But then again, you can’t take this index too seriously. It’s based on valuations, not actually transactions prices, so it only tells us what valuations are doing. My guess is transactions prices are significantly below the index, so maybe property isn’t that over-priced after all.

Story from Mark Stucklin... http://bit.ly/RCKwF

http://www.marbellapropertynews.com/

Malaga to have Spain’s best airport food and shopping zone

2009-09-12T09:36:00.000+01:00

Well known firms will be setting up in the new terminal

Six thousand square metres of bars, cafeterias and restaurants and 2,800 square metres of shops. With the opening of the new terminal building Malaga Airport is to become a first class commercial centre with an advantage to make most traders’ mouths water: more than ten million visitors a year, which could soon grow into 20 million. The lucky businesses to occupy this coveted space have now been chosen. Just over a month ago Aena awarded the contracts for the 21 new food and drinks premises and 24 shops, most of which will be in the new terminal building.

As expected competition for the contracts was tough. The large airport services groups sought the help of big names to give their bids more renown and the result is a “star-studded” commercial zone.

Those to have come out best are, on the catering side, the British multinational Select Service Partner (SSP) who will manage 15 of the 21 food premises available. Meanwhile on the commercial side the group Areas has won the contract for 11 of the 24 shops.

Some of the names to land at Malaga Airport ready for the Easter opening will be in Spain for the first time. These include Caviar House & Prunier, a restaurant aimed at more gourmet palates; and Whopper Bar, a new concept of burger bar launched recently by Burger King with only two branches open so far in the world: in Florida and Munich. The American coffee shop chain Starbucks has also chosen the new airport terminal for its first branch in the province of Malaga.

On the shopping side the airport will include a National Geographic store, the first in the world to be located in an airport. An area of the new commercial space will be devoted to Ferrari who hope to repeat the success they have had in Barcelona. They will be alongside names such as Adidas, Adolfo Domínguez, Cottet and Swarovski, among others.

On the food and drink side of things special mention must be given to La Moraga Airport, a venture that is fruit of the collaboration between the prestigious local chef Dani García and SSP in order to adapt his city centre bar to an airport environment. The partnership between the chef and the group will eventually be extended to other airports and countries, starting with France.

The director general of SSP for Spain, Blanca Ripoll, stresses that Malaga Airport’s commercial and restaurant area will be “the best in the country”. Airport staff are now working with the different firms in order to adapt their plans to the special features of an airport terminal. This is especially necessary in the case of firms that have never set up in an airport, such as Vips, which will be located in the new arrivals hall.

“We carried out an in-depth study of consumer behaviour, needs and habits at Malaga Airport, paying special attention to the British public, who make up 40 per cent of passengers coming and going from Malaga. They want to see names they know well, such as Starbucks or Burger King, but also places that make them feel that they are in Spain, and that is what La Moraga will do”, explains Ripoll.

Story from Sur in English.... http://bit.ly/Rpg8I

http://www.marbellapropertynews.com/

Would You Be Better Off Living Abroad?

2009-09-12T08:29:00.000+01:00

Taking a look at what makes people happiest when they move abroad, and whether you too would be better off as an expatriate living, working and loving life overseas

There was a strong increase in the numbers of people leaving British shores in 2008 compared to 2007; and as the recession continues to affect us all in very real terms, many of us are actively wondering if we wouldn’t be better off out of Britain altogether.

After all, a series of recent media offering shows us that everyone from children to adults taking a gap year are getting a great deal out of their time spent overseas…

So, would you be better off living abroad? In this report we’ll take a look at who seems to make a go of it overseas, what makes people happy abroad, how to find ‘happiness’ from your new life overseas and what are the real factors behind many people making the choice to exit UK and say hello to a whole new world of opportunity abroad.

In 2007 340,000 people exited UK according to the Office for National Statistics, but as the recession took a hold last year so this figure crept up to 395,000 at last count which was sometime in December last year. It seems that it’s ‘the economy, stupid’ that is having an effect in terms of increasing numbers of people vacating these shores! Whilst money may be harder to come by from a property sale, equity increase, savings account and job promotion in Britain, Brits are somehow finding the cash they need to get out at all and any cost.

And when you learn that 90% of parents living abroad with their children report that their children are positively benefitting from the very fact that they live overseas, you can quite understand that the demographic moving abroad is often largely made up of people of working age going in search of a better quality of life for them and their families.

Nations that are favourites are those where the weather’s better – however, there is also a stronger pull to countries where the economy is stronger too, where there are more jobs, lower taxes, a better quality of life and where more emphasis is based on family living and community support rather than in forcing parents out to work to afford to pay their mortgage and rising bills as there is in the UK!

New Zealand, Canada and Singapore are all favoured by working parents in terms of providing a good environment in which to raise children – according to the good old NatWest International Personal Banking Quality of Life Index – but surprisingly, Spain, a British favourite doesn’t do too well for education and school options for expat children.

Parents of course have to look at the schooling options available to their children before they move – they need to know whether there is a free education system in the country they move to, whether there is a new language to learn, what an international school education might cost and how well a child can be integrated into a given school system. The parents that do the most research and work with their child to help them settle in will of course get the best results more often than not.

In terms of adults finding happiness abroad however, this often goes hand in hand with employment prospects and then leisure time advantages – so often enhanced in a nation where the sun shines more! Australia tops the pole unsurprisingly – both as a favourite nation with Brits seeking work abroad, and those going in search of a better quality of life.

Of course, at the current time it is harder for any of us to make the break abroad in purely economic terms – and yet, this doesn’t seem to be crushing our desire to escape, if only for 6 months or more. According to the Halifax, increasing numbers of adult Britons want to get out of the UK for an extended period of time of at least 6 months. You see, the recession that the media has decreed is over (yeah right) is really bringing us down. However, it is also physically stopping many who would otherwise have left already.

Properties aren’t selling and they’re not rising in value either, this restricts what an individual has to spend to move abroad. At the same time, jobs markets overseas are not particularly healthy either – and so it can be harder than ever to leave Britain.

But, for those who are determined to make a break – and last year there were nearly 400,000 who were so determined that they made it happen for themselves – there are ways out. For example, rent out your property at home and rent abroad. Take unpaid leave from your job in the UK and use the time to actively hunt abroad for a new career. Start your own business, seriously downsize, move to a far more affordable country such as Turkey for example, or just bit the bullet, sell everything and fly!

Story from Shelter Abroad--- http://bit.ly/urHl4

http://www.bargainqualityhomes.com/

How the recession also effects the Super Rich

2009-09-11T12:35:00.000+01:00

Candy Brothers, Designers for the Super-Rich, Wait Out London Property Slump

MONACO — A black Maybach draws to a halt one morning in July, and two men step out onto the runway at London’s Biggin Hill Airport. Nick and Christian Candy ascend the stairs to their private jet, remove their Berluti shoes to safeguard the silk-and-wool carpet and settle in for the flight to Tuscany, where they’re overseeing the completion of the decks and interior of their new yacht, Candyscape II.

By lunchtime, the brothers are on the Tyrrhenian Sea near Viareggio, Italy, inspecting the boat with a team from Candy & Candy Ltd., their London-based interior design company. The living room features a custom-made, glass player piano activated by remote. Showers have waterproof plasma-TV screens built into their marble walls.

“This will be the best 62-meter yacht literally anywhere in the world,” said Chris Candy, 35, referring to the 203-foot-long vessel. Nick is 36.

In time for dinner, their jet whisks the British-born brothers to Monaco, where they live together in a 1,626-square-meter, or 17,500-square-foot, 30-room duplex penthouse that formerly belonged to the late financier Edmond Safra.

The Candys see their yacht and apartment as showcases for the style they can provide their clients, who include the Russian oligarch Boris Berezovsky, the Australian pop star Kylie Minogue, the American actress Gwyneth Paltrow and Vanisha Mittal, the daughter of the Indian steel magnate Lakshmi Mittal.

Born into a middle-class suburban family, the brothers rode to riches as developers and designers of high-end London homes. They took advantage of a property boom that saw prices for the city’s most expensive pads rise to £6,000, or $9,800, per square foot in 2008 from £2,000 in 2001, according to the London-based property consultant Knight Frank.

Then came the crash. In the six months after Lehman Brothers failed in September 2008, almost no London homes were sold in the so-called super-prime market, where houses start at £10 million.

In the first seven months of 2009, 26 £10-million-plus homes sold, compared with 75 for all of 2008 and 119 in 2007, according to Savills, a property group.

The Candy Brothers weren’t spared. They backed out of a plan to build a development in London called NoHo Square that included 244 apartments. Another project to erect 552 apartments on a 5-hectare, or 13-acre, site called Chelsea Barracks also went awry.

But the Candys say they can afford to wait for the property market to revive. One reason, they say, is that they cashed out of a joint venture they formed in 2006 to buy two Kensington hotels for £69 million. They planned to build 97 apartments there, they say, until they were offered £320 million by investors from Abu Dhabi.

That deal closed in March 2008, and the Candys pocketed about half of the £251 million profit, according to Steven Smith, head of corporate finance for the CPC Group, a Guernsey-based property developer owned by Chris Candy.

“The decision to sell that property was a key milestone,” said Ian Barlow, senior adviser at KPMG and a nonexecutive director of Candy & Candy. “They have very significant cash reserves to get them through the recession.”

The Candys’ most serious miscalculation was the decision to buy an 8-acre development site in Beverly Hills, California, in 2007. Their partner in the purchase — CPC Group’s only U.S. investment — was Kaupthing Bank, one of the institutions at the heart of Iceland’s bubble economy.

CPC and Kaupthing paid $500 million for the property, 15 times what it had sold for three years earlier. Kaupthing collapsed and was nationalized last year.

Mr. Smith of CPC valued the Beverly Hills site as of mid-August at less than $200 million.

The Candys’ future hinges on a project called One Hyde Park, a development of 86 apartments in Knightsbridge due to be completed in the last quarter of 2010. One Hyde is targeted at the world’s richest homebuyers and is owned by a joint venture formed by CPC Group and the Qatari Prime Minister, Sheikh Hamad bin Jassim bin Jaber Al-Thani.

Half of the units have been sold, with one penthouse bought last year for “considerably more than £100 million,” Nick Candy said.

Unwilling to cut prices, the Candys suspended sales in December and don’t plan to sell again until the spring of 2010, when a model apartment is completed.

“They’re desperate to keep values up,” said Johnny Turnbull, founder of Johnny Turnbull Property, an agency that acts for buyers of high-end properties. “They can push the market when it’s rising but not now.”

Nick Candy recalls the time in 2007 when CPC agreed to pay £30.5 million for two apartments under construction in Knightsbridge. CPC sold them a few months later, before the building was even completed, for £54 million.

“Nice deal, eh?” Nick Candy said. “We lived in an amazing era.”

The Candys are the first to say it’s a time that won’t be back soon.

Simon Packard reported from London.

Story from Blomberg News... and reported in the New York Times http://bit.ly/Kzk8s

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More landlords take non-paying tenants to court

2009-09-09T15:02:00.000+01:00

The number of property owners in the province of Malaga who resort to taking legal action against non-paying tenants went up by 19 per cent last year when the Malaga courts dealt with 1,264 new conflicts.

Malaga is the fourth province in Spain with the most cases of this kind going through the courts, after Barcelona, Madrid and Valencia.

The increase in unemployment is behind the fact that more and more tenants are getting into arrears, and at the same time the credit crunch has meant that more landlords depend on their rental income to pay their mortgage. However real estate agents complain that the court process prior to eviction is very slow and costly for owners.

Meanwhile landlords are becoming more demanding of potential tenants, requiring job contracts or even bank guarantees.

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The fall in House Prices appears to be Slowing according to Spains Ministry of Housing

2009-09-09T12:27:00.000+01:00

House sales plummet to record low

The number of houses sold during the first half of 2009 has fallen to a record low, according to figures published by Spain’s Ministry of Housing.

A total of 217,589 houses were sold in Spain during the first six months of this year, the worst figure since records began in 2004. The figure also represents a 31 per cent drop in comparison with the same period in 2008, when 316,096 were sold.

However, the fall in house prices appears to be slowing: prices in August fell by 8.9 per cent in comparison with the same month last year. This is the smallest fall in house prices in the last eight months.

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What we want to avoid is taking away the stimulus too suddenly, said Spanish Minister Elena Salgado.

2009-09-08T10:22:00.000+01:00

Spain Committed to Meet 2012 GDP Target

Spain will withdraw its anti-crisis spending gradually in order to avoid a double-dip recession, Economy Minister Elena Salgado said on Thursday.

'We will take it away gradually, and we still don't have a timetable. What we want to avoid is taking away the stimulus too suddenly, which could cause a 'W'-shaped recovery,' she told a news conference.

Spain's public accounts have gone from a surplus of 2.2 percent of gross domestic product in 2007 to an expected deficit of over 10 percent in 2009 due to a massive economic stimulus package and sliding tax revenue.

The economic stimulus package, one of the largest in the world in relative terms, will have added around 150 billion euros ($214.3 billion) to Spain's debt pile by the end of 2009.

Most economists are skeptical the government can meet its promise of a 3 percent deficit by 2012, in line with European Union recommendations, without sharp spending cuts which would hamper tentative signs of growth.

The government remained committed to the 2012 target, Salgado said when asked if the goal was realistic.

'Half of our deficit has arisen from government measures and half from economic slowdown. Activity will increase, meaning more tax revenue, and by 2012 the stimulus measures would have been withdrawn,' Salgado said.

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Get Ready for Double Dip in U.K. Property Prices

2009-09-08T09:47:00.000+01:00

Commentary by Matthew Lynn

Sept. 8 (Bloomberg) -- It doesn’t take much to get the British excited about house prices again. As the European fall approaches, there are signs that the market is bottoming out. It may even be rising again.

Does that mean the slump is over? Not at all. Expect a double dip in home values.

True, there are grounds for optimism. The Bank of England is printing money furiously, and the economy isn’t contracting the way it was at the start of the year. Against that, any increase in interest rates will hit the market hard, the banks are intent on restoring their balance sheets at the expense of mortgage holders, and the U.K. economy is losing jobs. All that means one thing: House prices have further to fall.

Right now, there are clear signs of recovery.

Property-research company Hometrack Ltd. said last month the average price of a home in England and Wales rose for the first time in two years. Other surveys have painted much the same picture. Nationwide Building Society said house prices in August increased 1.6 percent. That was the fourth consecutive monthly gain and the biggest since 2006.

In London, luxury-home values have been rising for five straight months, according to real estate agency Knight Frank LLP. Since it is London that often leads the whole market, such a development can only be another positive sign.

There may be more positive signals down the track. The Bank of England said last week mortgage approvals rose to their highest level in 15 months in July. If there is more money being loaned, that can only strengthen the market further.

Safe to Buy?

So it looks like the collapse in confidence in the housing market -- which has knocked 20 percent off house prices since the decade-long boom peaked in August 2007 -- is now over. It’s safe to buy a house again, right?

Not quite. There are good reasons to expect a second dip in the market later this year or early in 2010.

First, the benchmark interest rate is still at record lows of just 0.5 percent. Most people can still manage to at least pay the interest on their mortgages -- and so long as you can pay the interest, the property usually won’t be repossessed. At some point, interest rates will have to rise again. Once they do, many people will be in trouble. We can expect to see a lot more repossessions. And many of those properties will be back on the market at bargain prices, pushing prices down again.

Widening Spreads

Second, banks are repairing their balance sheets at the expense of mortgage holders. The spread between what the banks pay depositors and what lenders charge for loans is widening. According to Moneyfacts Plc, the margin on two-year money is the widest it has ever been. That may be good news for banks and their shareholders. Competition has been reduced, and it is easier for them to charge higher prices. But it is bad news for mortgage borrowers, the people who go out and buy houses.

Third, a lot of lending has been taken out of the market and isn’t coming back. According to CreditSights Inc., almost 300 billion pounds ($492 billion) of U.K. mortgage debt was securitized and sold to the bond markets from 2005 to 2007.

“That represents more than 90 percent of the growth in mortgage debt over that period,” it said. The world isn’t exactly clamoring for British securitized mortgages anymore, and won’t be for a long time. With less money coming into the market, there won’t be the same kind of demand for houses.

‘Socially Useless’

Fourth, for reasons that a psychologist could better explain, the British are attacking the financial-services industry, even though it is the biggest branch of the economy. The chairman of the U.K.’s Financial Services Authority, Adair Turner, even proposed a tax on financial transactions to help limit the size of the industry. He described parts of banking as “socially useless.” With that sort of attitude, it won’t be surprising if many foreign bankers go elsewhere, withdrawing their support from the housing market.

Finally, the U.K. economy is set for a decade of slow growth. Unemployment rose to the highest level in 14 years during the second quarter. Monetary expansion and government spending are tempering the decline somewhat, but the fiscal stimulus will have to end soon, and the big tax increases needed to bring the deficit under control will keep demand subdued for years. There is still a lot of pain ahead and house prices can’t grow much faster than the overall economy.

Don’t be fooled by the slight recovery in house prices over a few months. Markets always stabilize for a period, both on the way up and on the way down. It is just a pause for breath -- and the second dip in the crash is just around the corner.

(Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Matthew Lynn in London at matthewlynn@bloomberg.net.

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The "massive correction" in the London property market, both in residential and office prices, is fuelling wealthy Spanish investors' interest

2009-09-07T14:10:00.000+01:00

Story from Reuters Madrid
Spain's rich eye stocks, overseas property

By Judy MacInnes - Analysis

MADRID (Reuters) - With Spain languishing in what many economists consider will be a prolonged recession, its rich have returned to buying shares, encouraged by a decoupling of the stock market from the real economy.

The eurozone's No.4 economy is expected to be the last in the region to emerge from recession after an international financial crisis hit the key pillars of construction and consumer demand, exposing the country's structural frailties.

From October 2008 to early March 2009, when global markets seemed to be in free fall, many of Spain's second biggest bank BBVA's private clients preferred to cut their losses and switch to cash.

But now recovering equity markets are emerging as a good option, with interest rates at record lows, even if the real economy offers plenty of reason for concern.

"When the Spanish stock market touched bottom early March, leaving many companies trading at prices way below their book value, we began to see renewed buying interest," said BBVA's Head of Private Banking for Spain Alfonso Gomez.

Spain's IBEX stock index has risen 64 percent since March 9, outpacing a 40 percent rise in the broader European market .

Favourable tax treatment for the wealthy's investment vehicles, known as SICAVS, is also likely to ensure continued equity investment.

These funds manage about 27 billion euros in assets and the government has indicated that SICAVs may not be included in planned tax reforms.

Spain's largest bank Santander's specialised private banking unit is also recommending clients get out of government bonds and invest in corporate bonds, which offer better yields.

"These investors are prepared to take a little more of a risk now and I think this trend will continue in the coming months," said Luis Moreno, Business Development Manager at Santander Private Banking.

SPAIN'S NEW RICH

The Spanish wealth market has expanded strongly in the last few years and its composition is now very different from the early 1990s when the country last faced a steep economic downturn.

At that time, inherited wealth accounted for 75 percent of the market and the other 25 was attributed to entrepreneurship.

Now the situation is reversed as a result of the wealth created by Spain's property boom which fuelled over a decade of robust economic growth.

While the portfolios of these new rich were hit by the subsequent property bust, the majority have managed to ride the storm unlike most of Spain's real estate companies and developers, many of which have gone to the wall.

"Wealthy families don't buy property to speculate. They invest in the best assets in prime locations with a long-term horizon," Moreno said.

One of Spain's top 10 rich list, with a fortune slated at around $18 billion (11 billion pounds), is clothing retailer Inditex founder Amancio Ortega, a railway worker's son who started his business in the 1960s making dressing gowns in a garage in La Coruna, northern Spain.

Inditex has held up better than counterparts across the world as consumers have tightened their belts amid the downturn thanks to its focus on selling catwalk styles at knockdown prices.

PRIME FOREIGN PROPERTY EYED

Prime foreign property assets are on the wealthy's buy list as a way of diversifying risk and obtaining higher yields, while, most importantly, preserving their capital.

The "massive correction" in the London property market, both in residential and office prices, is fuelling wealthy Spanish investors' interest, Gomez said.

"The pound/euro exchange rate also provides an additional yield," he noted.

Since the financial crisis began, the pound has dropped over 20 percent against the euro, helping those with deep pockets to take advantage of real estate bargains in certain prime London locations.

"Rich people are always attracted to bricks and mortar," Gomez said, but said some private banking clients are also investing in property in central Madrid with a 7-10 year horizon. (Editing by Sitaraman Shankar)

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INHERITING IN THE SUN... If you fear missing your chums, rest assured they will waste no time visiting you!

2009-09-06T10:19:00.001+01:00

INHERITING IN THE SUN

WORLD leaders are making noises about demonising tax havens, popular with bank robbers and dodgy dictators, but there’s less agreement between governments on the odious inheritance tax.

Plenty of idyllic destinations do not have it – including many Caribbean islands, Australia and New Zealand, Singapore and parts of Europe. Portugal, Gibraltar, Cyprus, Sweden and Switzerland are all good places for those wanting to beat the tax, while closer to home, the Channel Islands and the Isle of Man are also worth considering.

Unlike the US, where only the very wealthy are taxed at death, ordinary Britons – people who have worked and saved all their lives (and paid their taxes) – have 40 per cent of their estate above the £325,000 threshold grabbed by the Inland revenue at death. So almost anyone owning a detached house in the South-east is clobbered.

last year, some six per cent of British estates (about 35,000) had to fork out nearly £4billion to the Government in inheritance tax (IHT). It is not surprising therefore that many families are looking to move overseas, to countries where the living is easy.

To change your domicile permanently, it is safest to remove all assets from the UK. Even keeping a second-home foothold is risking one’s entire estate being liable for the full tax. If you trust your children and live for seven years you could give them the money to buy a house to which one might return for ‘holidays’ – but care must be taken even then.

Charles Weston-Baker, head of the Savills estate agency’s international residential and resorts department, said: “While I’ve not so far met anyone looking to move overseas for the sole purpose of escaping inheritance tax, it’s certainly a major factor in the decision-making process.”

A trick used by some people with assets of €2million or more is to buy or rent a flat in Gibraltar and live in Spain.
They would pay no more than £22,000 in annual tax and no IHT would be payable. others, however, favour Monte Carlo.

Cyprus is a popular retirement destination which offers numerous tax advantages to retiring Britons, including a refund of most VAT on property purchase and pensions paid in the bank without tax deduction, but it is the lack of inheritance and wealth tax that is perhaps the biggest magnet – plus those long, hot summers.

A resort designed with retirees in mind is Acropolis Panorama, near the village of Peyia, north of Paphos. The village already serves as home to some 2,000 Britons, not least because of its views of Coral Bay. The developer, Between Friends, is asking from €167,000 to €1,240,000 for the 33 studios, apartments and villas. Another designed with Britons in mind is Aphrodite Gardens, a leptos Estates development also in Paphos, where asking prices start from €233,800

Grenadines, south of St Vincent.
Those idyllic Caribbean islands are pretty tempting. Apart from having to batten down the hatches every decade or so when a hurricane brushes by, the lifestyle is most agreeable. Bequia is the largest of the islands in the glorious
Modest tourism and a small (30-acre) development called Adams Bay will go some way to solving the problems created by the loss of agricultural jobs.
The development is in Caribbean style and some of the houses are truly grand. Prices range between £430,000 and £1.65million. Buyers should allow in their budget for a further £6,000 to £35,000, depending on the purchase price, for fees, taxes and stamp duty but afterwards taxes are low and there is no inheritance tax.

St lucia is another great place to live. There is no VAT on property, no capital gains tax and no inheritance tax. The Jalousie Plantation, between the famous twin peaks known as the Pitons, is having a $100million facelift and is due to reopen in 2010 as the Tides Sugar Beach. Properties there cost between $700,000 and $6million.

There are, however, cheaper options in the Caribbean area. Gary Hooper and his wife Pamela from Maldon in Essex have bought two properties through Prestigious Properties, one at Silver reef in St Kitts and another at Alexandra, in the Turks and Caicos Islands.

They cost about £145,000 and £250,000 respectively.

Mr Hooper, whose company designs and builds bespoke kitchens, bathrooms and home studios, said: “At this stage of our lives we saw them as the perfect solution for holidays and a potentially good investment.

“We are not ready to retire yet, but when the time comes we will look very seriously at moving to one of the islands.”

However, one doesn’t have to jet away to tropical islands to escape inheritance tax. There are, for example, the Channel Islands, all of which are inheritance tax-free, but there are problems. Property on Guernsey tends to be prohibitively expensive while Jersey accepts only a few incredibly rich new residents a year.

Three times larger than Jersey and 10 times the size of Guernsey is the Isle of Man. It is a beautiful place to live.
Keith Kerruish of the Chrystals estate agency said: “It is a lovely island, very accessible and the leisure facilities are fabulous, with everything from diving to mountain walking – and there are no fewer than nine golf courses.

“Health and education are well catered for but the biggest plus of all is the tax regime.

“There is no capital gains tax, income tax runs between 10 per cent and 18 per cent and no one is going to plunder your savings when you die – there is definitely no inheritance tax here.”

So, if you’ve worked hard all your life and saved a few bob – and live in a house worth more than about £325,000 – an island retirement might be well worth considering.

If you fear missing your chums, rest assured they will waste no time visiting you and they might even move next door...

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