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Weekly Report

Business Over Tapas (May 23rd 2015)

By Lenox Napier and Andrew Brociner

sábado 23 de mayo de 2015, 01:27h

A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners: with Lenox Napier and Andrew Brociner - For subscriptions and other information about this site, go to businessovertapas.com - email: [email protected] - ***Now with Facebook Page (Like!)*** Note: Underlined words or phrases are links to the Internet. Right click and press 'Control' on your keyboard to access. Business over Tapas and its writers are not responsible for unauthorised copying or other improper use of this material.

Editorial:

Elections this Sunday. Will things change? Surely yes – only not as much as we might hope or expect...

Housing:

A property development company called Neinor Homes is investing 1,000 million euros in land with the intention of launching ten new development – some 3000 homes – per year. Story at Spanish News Today here.

'Things are looking up for the Spanish property sector this year, claims Mario Garcés, under-secretary of state at the Ministry of Public (Fomento), talking at a conference organised by the Spanish Property Studies Foundation. This year more properties will be sold, more homes built, and more mortgages approved than in recent years, he claimed...'. More at Mark Stüklin's Spanish Property Investment.

Ecologist Rafael Yus is back – here with 'Climate Immigrants (that's us) Indignant at being Accused of Despoiling the Countryside'. Rus in this article 'puts the record straight' and quotes a critical article from The Olive Press with his own take on things. (Original at El Observador). (One of Lenox' hostile comments is answered – heh!).

Tourism:

The Valencia tourist association La Asociación Empresarial Hostelera de Benidorm, Costa Blanca y Comunidad Valenciana (HOSBEC – it's a guild really), is campaigning for 'a rigourous and exhaustive control of all illegal lodgings of any type, including the so-called 'economía colaborativa' (where a room is provided free against some other trade-off)'. More at Hosteltur. A letter touches on this monopolistic situation at the end of this report.

The prestigious NH Hotel group has a powerful Chinese backer called HNA which is now looking to take over control of the chain. All is explained at Preferente.

'Spain has this year been awarded a total of 678 blue flags: 101 for its marinas and 577 for its beaches, which is four more than last year and a new record...'. From Kyero.

Finance:

The national pension fund, the ‘hucha de las pensiones’ or, more properly, the 'Fondo de Reserva', is being drawn on to pay pensions at such a rate that, according to experts, the fund will dry out entirely within the next five to ten years. El País has the story here.

Headline at Kyero: 'GDP Will Rise to 2.9% and Unemployment Will Drop to 22.2% in 2015'.

According to figures at the Banco de España, our city halls hold a debt between them of 32,000 million euros. Easily the most indebted is Madrid, which owes around 6,000 million euros, more than the combined debts of Barcelona, Valencia, Sevilla, Málaga and Zaragoza. The high debt in Spain's capital goes back to 2003 when Alberto Ruiz-Gallardón became mayor. Story at El Español.

Politics:

Susana Díaz is now considering fresh elections in Andalucía for September – perhaps in the hope that everyone will be bored of voting so many times in one year. Story here. She has until July 4th to form a government. According to La Información, the Partido Popular would come out the worst in fresh Andalucía elections (although the results from the local elections this Sunday would no doubt be an indication of how things are moving).

If Podemos wins, it will be the last 'free' elections ever, says Esperanza Aguirre in El País. ETA prisoners want to see Podemos in the Government, says El Mundo in a headline that has caused both indignation and much merriment (here). Indeed, all to play for!

Local Elections:

The elections – local plus most autonomies – are held this Sunday May 24th.

In all, 8,122 Town Halls (including seven new ones) are having elections for a new council and mayor. Surprisingly, many towns across Spain have less than 500 residents, says El País in English, indeed, a few have less than ten inhabitants. '...the smallest Spanish municipality, Illán de Vacas, in central Toledo province, has just three residents. For years, the only person on the local electoral rolls was the mayor...'. Heh!

The Guardian explains the importance: '...The votes will be a useful prequel to a general election that will be called later this year. Since the last election in 2011, Spain’s political landscape has changed dramatically...'.

'Mi voto me han robado...': silly song from New York on YouTube. The fact is, almost none of the Spaniards who are working abroad have been able to vote. 'Hundreds of thousands of Spaniards abroad can't vote due to bureaucratic issues', says 20 Minutos, pointing out that only 2% of Spaniards abroad voted in the European elections last year.

In Mojácar (Almería), one of the candidates for mayor is British. Ideal has the story (That's Lenox in the picture, second from the left).

Corruption:

Spain's fifteen most important cases of corruption have been put together in a book called 'Corrupción en España, los trapos sucios' (The dirty washing) by Ezequiel Teodoro. The book is based, apparently, on 6,000 reports of corruption appearing in the Spanish press.

El País in English headline: 'Why Valencia is paying the high price of rampant political corruption'. 12,500 million euros have been 'plundered from the region's public coffers' says the report here.

An astonishing digest of how small town halls 'rob' their citizens. An article in Diagonal Panorama called 'Así nos roban'. A glimpse: '...The municipal elections are always in May. That year, in the first days of January, the councillors head over to the Accounts Department to find out how much is available for their annual budgets. Since then, in a race against time, they have just four months to empty them all. Is it usual to see them wondering: "what needs painting?," or “is there anything needed for the polideportivo?". It doesn't matter what. Budgets must be exhausted. The maximum flow of money possible must be spent on "el pueblo". It could be the last chance for commissions. It is the best time for absurd expenses or nutty ideas. No councillor is so stupid as to leave money in the budget that might be spent by another after the elections. Even if his own party were to win, who knows who might take over his department. Better not leave anything...'.

Courts

The Government Prosecutor is asking for some jail time in Melilla for some local politicians who apparently bought votes back in 2008. Sorry story at El País here.

The Government Anti-corruption Prosecutor Pedro Horrach has asked Judge José Castro to reduce the bail against Princess Cristina de Borbón from 2.7 million euros to 500,000€. The story at El Huff Post. The title is 'Rebajas!' - Sales!

Various:

From David Jackson: 'Budget ombudsman begs Government to stop wasting money on more AVE track'. The AVE is not sustainable and runs at a massive loss. Another site, VozPópuli, says that the State has lost some 1,000 million just in running the system in the past three years.

'Brits taking early retirement and moving to Spain are excluded from the national health systems in the UK and in their new home country ... Changes in Spanish laws mean people arriving after 2012 do not qualify for state care – and they are no longer permitted to use the British NHS after changing their residency status...'. Report found at Round Town News.

Monsanto, the GM crop company, has finally thrown in the towel in Europe for its transgenic seed business, except for Spain and Portugal, whose Governments seem rather more accommodating. Story at Eco-Portal.

Madrid (La Empresa Municipal de la Vivienda) paid two million euros in commission to an intermediary in the sale of the 1,860 council-owned apartments to Fidere-Blackstone in June 2013. The new owners have since hiked the rent up by 40% apparently. Story at El Diario.

The looming 'Football strike' has been called off after orders from the National Audience.

Aena-controlled airports in Spain will soon have unlimited free Wifi, says El Huff Post.

Hard to sleep what it's hot? El País in English suggests some remedies. (Our own recommendation, have a stiff shot of whisky on retiring).

The average price of a bed in a private residencia, or 'old people's home' in Spain, was 1,830€ per month last year, says La Mirada Crítica here. The price varies by up to 40% according to the autonomy in question. The most expensive: Euskadi at 2,150€, the cheapest: Extremadura at 1,250€. A useful site for information is Info Residencias here.

From The Telegraph: 'The new director of Spain's state-funded history academy has said that the official biography of General Franco will be amended to define the man who led the country for almost four decades as a dictator. Carmen Iglesias, the director of the Royal Academy of History, announced the move in response to a controversy surrounding the existing entry on the Spanish military leader in the institution's biographical dictionary which described the Franco regime as "authoritarian but not totalitarian"...'.

'Brexit'. The Guardian asks: 'Are you seeking a second passport or nationality because of concerns over the UK’s EU status?'. Fill out their form if this issue worries you.

See Spain

'Los Millares (3200-2200 B.C.) Considered the most important European archaeological site of the Copper Age. While in Almería, you shouldn’t miss one of Europe’s most important archaeological sites of the Copper Age. It is located in the municipality of Santa Fe de Mondújar, some 17 kilometres from Almería city...'. From Unique Almería.

Further Comments on the Housing Market

by Andrew Brociner

We have been looking at the housing market in Spain for five issues now and have seen that we are still in a period of consolidation. We have explored topics such as the decline in population, the decrease in new households, the price of houses on national and regional levels, the construction of new houses and the stock of unsold houses. Many factors point to a lack of demand and this is reflected in the lack of price movement. In this issue, we will make a few more considerations about the housing market.

If we look at the total number of houses sold in the last few years, in the chart below, we see that while the number is increasing, it is neither regular nor significant. It is only another reminder of how slow things are to move.


The areas where there are most houses changing hands are in Andalucía, Cataluña, Madrid and the Comunidad Valenciana, in that order. In Andalucía, Málaga accounts for about one third, followed by Seville.

While this order is in absolute numbers, the biggest increase in the last few years has been in Madrid. So if we look at the change in these years, we get a slightly different picture. Excluding some places where the transactions are very small, next in line is Cataluña and then the Comunidad Valenciana (led by Alicante and then Valencia) and followed a far way off by Andalucía (with Málaga still leading). But, while Madrid and Cataluña have increased slightly more than the national average, their price decrease was by far more. They are just starting to recover some of the losses. People seem to be capitalising on their depressed prices.

Most of the number of transactions completed are for second-hand houses:


Here again, in terms of absolute numbers, Andalucía has seen the most second-hand houses changing hands (with again Málaga accounting for a third of these), followed by Cataluña, Madrid and Valencia, with these three having similar numbers. In terms of change over the last few years, and again excluding places with small numbers, Madrid is by far the place with the biggest increase, followed by Cataluña, Valencia and then Andalucía.

We can see that the number of new houses sold is only a small fraction of the total.

In Spain, after two years, new unsold houses get reclassified as second-hand houses. Now, the worrying thing is that there is, as we have seen, a huge glut of these second-hand houses lying empty in Spain, around one and a half million.

The reason, as we can see in the chart below, is that for years, massive construction went on in Spain, at a rhythm of over 500,000 houses per year and in two peak years, of over 600,000 per year. Now, had this construction stopped on time, perhaps things would be different, but, as we have seen, construction kept right on going after the boom ended when there was no more demand for those houses. We can see, in fact, that in 2009, there were still 387,075 units built and as late as 2010, there were 257,443. Even if we take into account the time it takes to build a house, the planning of these new houses still took place when the boom was over. Moreover, these numbers refer to units completed and we also know the sad sight of so many buildings left uncompleted.

This building frenzy with no market left only led to an accumulation of unsold houses which still remains. For while there is some buying activity going on, there is not nearly enough to absorb all of the empty houses.

To add to this, construction still goes on in Spain, albeit at a fraction of what went on during the boom, but nevertheless, at about 4000 units a month. This only contributes to why things are so slow to move. At this current trend, it will take a very long time for the glut of outstanding houses to be absorbed. This supply of new houses only exacerbates the problem of the lack of demand for houses in Spain, as we have discussed at length in previous issues. At present, there is insufficient demand (as we have seen, it is not picking up) to absorb these houses. Only if something changes significantly, such as an increase in demand coming from a new period of sustained growth sufficient to lower the unemployment rate, will things pick up again, but for now, this is not the case.

Letters

Hi Lenox, In the EU or not!
It does seem that it is believed by many that leaving the EU would be "A fate worse than death!" but from my experience there would be life after the UK's exit. I lived in Spain prior to its membership of the EU and did not find it to be an unpleasant experience, in fact Spain was more Spanish then and I cannot say that I remember any experiences which were any worse than today. True working and conducting a business was a little more difficult but not much more than it is now.
Spain needs the vast sums of cash which the Brits bring in the form of residence and tourism and was well aware of that in the Reign of Franco, possibly more so than today.
Farage will not go away, remember his party had twice as many votes as the SNP. If the UK had the same electoral system as most of the EU, his party would have more than 100 seats in Westminster today. If the EU continues its inflexible stance then the consensus to leave the EU will continue to strengthen. History shows that there have been times when Britain has been at its best when it stood alone and the British have no fear of doing so again if it is forced upon them.
NB As always, I greatly enjoy your weekly news from Spain.
Personally I want the UK to remain in the EU but not at any price.
I do hope we don't fall out regarding my comments. John.

(not a chance... more comments please!)

On rentals. BoT saw the following letter:-

I warned a few days ago that I am facing a shortfall of earnings for rentals during July/August alone of €12,500. Just now I received this statement from a friend up in the Jalón valley:
'Yes, rentals this year are not just disastrous. In our case they are catastrophic. We have only one week reserved in July/August. Normally by now we would have seven weeks full in that period. The income shortfall in July/August is currently over £18,000'.
Everywhere I ask comes back the same story that villa and apartment bookings this year are a major disaster but if you look at what the Madrid government has done to Spain these last few years - what with the 720 Declaration, unfair taxation, unfair Inheritance tax assessments, re-assessing peoples' sale prices of their villas and (totally falsely and illegally) claiming underpaid capital gains and much much more - and all this carried out by the monoglot and not very well educated people in the Hacienda, there's nothing but problems caused to disrupt people and make them leave Spain...

'Fred' answers Sr Yus Ramos (above):

Mr Ramos, a person who purchases a property using the legal framework of your country is not "colonizing" an area; they are exercising their right to live and reside in a union of countries and are purchasing properties with what they were told had all the proper deeds and occupation licenses. Lawyers acted for them, notaries signed off the purchases, banks gave loans etc. If all that can occur, how can you blame the buyer?!
Spain has laws to stop illegal developments in the countryside. If your country cannot enforce or control or document such construction then whose fault is that? Fact is, the systems for enforcement were non-existent for many decades, and landowners, mayors and councillors all colluded in a grand scheme. Mayors wanted to transform their poor areas, and they often acted illegally to achieve it. Many are still appearing in court for these crimes now, in May 2015. Buyers came to your country in good faith, they used your legal systems and they ended up purchasing properties that were found to be retrospectively illegal.
If you want your countryside pristine and with low levels of development, your country should not allowed the development to begin with. Once this chain is started it is very hard to stop it, but that is not the buyers fault. They come with good intentions. Spain let them down. If you persist in ignoring the truth behind this issue, you take your country further backwards. Stop worrying about "climate immigrants" as your own countrymen are equally affected. They have been evicted, they have had their houses demolished, they have been thrown in the street irrespective of them being elderly or having young children. Why don't
you write about that, Mr Ramos?

Finally:

Here's a nice post: barrios of Madrid and their songs (66 of them on YouTube). The map doesn't work, but the songs are all there, after the story.

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