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Weekly Report

Business Over Tapas

By Lenox Napier and Andrew Brociner

jueves 07 de mayo de 2015, 23:52h

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:

The chapapote, the tar that washes up on the beaches, has returned; this time following the sinking of a Russian trawler off the island of Gran Canaria. '...The Oleg Neydenov was carrying nearly 1,500 tonnes of fuel oil when it sank on April 15 in an area environmentalists say is home to deep-sea coral and a significant population of dolphins and turtles...' says Phys.org. It could, of course, be worse. The Canaries are the destination of around ten million tourists a year. In Almería, a huge number of innocuous sail-boat jellyfish were stranded on the shores last week. Imagine if they were the stinging kind. Almería receives about a million tourists a year. The tourists will, of course, continue to arrive – neither of these events is important. But one day, something will occur that will cause the industry to collapse overnight. Just like in Egypt. Should Spain be keeping all of its eggs in one basket?

Housing:

'Illegal builds': A joint press release from SOHA and AUAN at bottom of this week's newsletter. For another view, see ecologist Rafael Yus Ramos' opinions under 'Essay'. Meanwhile, Andrew Brociner considers the evolution of house prices in Spain below.

'The Spanish property crash has been going on for seven years, but banks still have tens of thousands of repossessed holiday homes and developments to sell. The Spanish property portal Idealista.com reports that Spanish banks still have 150,000 real estate assets on their books, including garages, offices, industrial buildings, land, and lots and lots of homes. The article, from Mark Stüklin's Spanish Property Insight, goes on to give the various banks and caja's property websites for those interested.

'House prices in Spain are still falling more than seven years after values started to drop following the financial crisis. Property valuation web site Tinsa reckons the average home price was 2.8% lower in March 2015 than 12 months earlier, although the drop is slowing...'. Found at iExpats.

'300 buildings built on non-buildable land in Marbella are to be legalised. The Town Hall has started the procedures to regularise 296 buildings, including homes, sheds, settlements and warehouses in limbo to pass to buildable or not consolidated land...'. Story found at Typically Spanish here.

Tourism:

Getting down to the main question: how much do they spend? Figures from the first quarter suggest that visitors to Spain spend an average of 1,015€ per person, or 116€ a day says El País with enthusiasm. Figures are up 7% over last year, at 10,764 million euros. Visitor numbers are also up by 5.3% at 10.6 million foreign tourists between January and March. However, another source, Sabemos Digital, points out that not all of a tourist's holiday money actually makes it to Spain – airlines, agency commissions and so on – and that the Banco de España uses a calculation of around 22% less than the Ministry of Tourism.

Health Tourism, a new and exciting form of income for Spain, already generates some 500 million euros and an annual growth of 20%, says El Confidencial. Apparently Russians and Arabs are the big spenders, and those who seek medical, rehab treatment or spas are directed to an association of hospitals, doctors and specialists at Spain Cares here.

Finance:

'After three years in a recession, Spain's economy is growing again. That makes it one of the few countries in the euro-zone besides Germany to have a positive GDP. In fact, Spain's economy grew 0.7% in the fourth quarter from the quarter before. That matched Germany's quarterly growth and helped the euro-zone's GDP to grow 0.3% on a quarterly basis, better than what economists were expecting...'. So says The Street.

'...“They are good figures, we should celebrate,” said Mariano Rajoy, Spain’s prime minister, after data released on April 23rd showed the country’s recovering economy had created close to half a million jobs over the past year. Many Spaniards were feeling less than festive. Since the euro crisis hit in 2010, Spain’s astronomical unemployment rates have vied with Greece's for first place in Europe; they have fallen from a high of 27% in 2013, but slowly. Indeed, the unemployment rate increased slightly in the first quarter, to 23.8%...'. From The Economist.

'While talking in the Upper House of Parliament, the President of the Government reiterated that Spain will grow by 2.9% in 2015 and it will be the EU country where most jobs are created this year. He also highlighted the loyalty of Central Government with Catalonia and the investments made in the Basque Country...'. From the official La Moncloa website.

If it wasn't for corruption and the 'old friends network', Spain would be 20% richer, says El Economista here quoting a major study called Growing Like Spain 1995 - 2007 (here).

Do you need to submit a Spanish tax return? Find out with Law in Spain here.

Has your bank got an 'electronic copy' of your passport and NIE? You must be sure that they do since the banks are instructed by Hacienda to freeze your account from May 1st without this formality. El Huff Post takes up the story of what to do. El País TV explains in a short video what will happen if you fail to give your bank the required information.

Politics:

The ex-President of Andalucía Manuel Chaves has confirmed that he will 'stand down' at the next election 'for a personal decision'. This leaves both Ciudadanos and Podemos with a chance to sit down and talk with Susana Díaz about supporting her as President of the region. Neither party however appears convinced... The story at El Huff Post.

The Partido Popular admits that the scandal over Rodrigo Rato, their erstwhile vice president and minister for the economy, has forced them to change their 'we are fighting corruption and repairing the economy' strategy in engaging the voters. The disaster for the party has sewn confusion and doubt among the militants, says Europa Press.

The First of May banners to be carried by the UGT and CCOO in Teruel may not read 'Así no salimos de la crisis' (we won't escape the crisis like this). So says the Electoral Board – 'as it might affect the vote'! From El Ventano. (It's starting...)

In an attack aimed at Ciudadanos, President Mariano Rajoy said in Salamanca recently that the worst thing one could do now would be to change the Nation's economic policy. Ciudadanos wants to 'simplify' (raise the basic rate on) the IVA. Rajoy said that his Government would create many jobs in the next legislation, bringing the work-force up to 20 million strong. More at Euro Mundo Global here. The same news-site has an article that also attacks the Ciudadanos, but this time from the Left. Pablo Iglesias (Podemos) thinks that Alberto Rivera (leader of Ciudadanos) is a sort of 'Rajoy Lite'.

The obispos, the Spanish bishops (rather more accurately: 'church leaders') are now breaking publicly with the policies of the Partido Popular. The Church is asking for forgiveness for not looking out better for the poor, and is asking the Government to maintain the Welfare State and to avoid giving the country to the bankers. The Church has also come out publicly against corruption and the hostile police treatment against immigrants.

There is some talk within the PP of substituting Mariano Rajoy for 'a younger leader'. The name of Alberto Núñez Feijóo, current President of the Junta de Galicia, is one possible. More here. Another – not so young – possibility is of course Madrid's Esperanza Aguirre.

More international criticism of the 'Gag Law', this time from Al Jazeera: 'When Spain first started making noises about an impending "Citizens' Security Law" that would criminalise various forms of popular protest, optimists may have assumed the flirtation with overt fascism couldn't last. At the very least – they might have reasoned – the government would have to retreat to semi-fascist mode. Not so. Approved on March 26, and expected to come into force on July 1, the law might be mistaken for something out of the Franco playbook...'.

The Government manipulation within the news-service provided by the public television RTVE is discussed in The Financial Times of London, says Bluper indignantly... Three points are mentioned in particular which come in for external massage: The Catalonian drive for independence, corruption and Podemos.

Union News:

According to the ABC, the main unions – UGT and CCOO – have around 10,000 people working in the different autonomous regions, who are paid, in public funds, to do nothing more than union chores. These are Spain's trade union officials. These individuals are employed, but only work in union duties. Andalucía (naturally) has 3,700 of them.

Courts

The outgoing mayor of Madrid, Ana Botella (José María Aznar's wife), must answer to charges concerning the sale of public-owned apartment blocks to foreign 'vulture funds'. 1,860 'council' apartments were snapped up by Goldman Sachs-Azora, and a further 1200 by Blackstone – to the evident disadvantage of the residents. Story here.

'The PP are to be acquitted of all tax crimes in the Barcenas case. The party will be let off the hook, despite prosecutors concluding that the PP used secret accounts to spend undeclared money. Instead anti-corruption prosecutors have laid the blame at the feet of former treasures Luis Barcenas and Alvaro Lapuerta, calling for five year jail sentences for both...'. Story at The Olive Press. Rosa Díaz, the leader of the small UPyD party, said it is 'una verguenza' (a disgrace) that the Public Prosecutor has excused the Partido Popular on the Luis Bárcenas case and that 'they often acted more like a defence team, more concerned with protecting the Government or the PP than fighting for justice'. El Mundo has more. Meanwhile, El Boletín reports that Hacienda staffers are 'perplexed' by the PP aquittal.

Income from traffic fines have increased by 80% in the 'crisis years' since 2007, from 16.3 to 29.1 million euros, says the DGT and reported in El País. Over ninety per cent of drivers, says the newspaper, consider the traffic fining to be fundamentally about the money, not the crime.

Essay:

Thumping through the latest, lengthy attack 'Demoler o no demoler, ésta es la cuestión', by the eccentric ecologist Rafael Yus Ramos in an article in El Observador (a useful news-site for those who live in Málaga) here, we learn that all those connected with the building of those 'illegal houses' (yes, that ecologist) are equally guilty of codicia – greed. This includes the buyers (speculation etc. Who knew?). '...All the participants in this drama, including those who call themselves “buyers in good faith”, will obtain benefits from this urban euphoria – except of course the local environment, which belongs to us all...'. Yus continues, with arguments in favour of demolitions, including the evident one that it discourages future builders, politicians and promoters from trying it on again. '...We would have saved, right there, the 23,000 illegal homes just in the Axarquía Valley' says Yus triumphantly. The article continues with numerous annotations of judicial points supporting the premise that these properties should be demolished (perhaps the owners, builders and general country-folk could all go and live in bank-owned apartments on the edge of the City). Following on from this, he says, Ecologistas en Acción has presented a proposal to the Junta de Andalucía to control illegal urban sprawl including taking away planning power from the guilty town halls where the homes are not demolished following sentence – '…in connivance with the interest of the speculators who call themselves “buyers in good faith”, together with the politico/business plotters...'. The Junta won't be reacting, laments Yus, since they need those countryside voters! The “climactic immigrants” (that's us!) who live on non-urban land, managed to convince some “weak-willed senators” to introduce some protection through the modification of the law 319, allowing them temporary relief from demolition until their investment is repaid – subject to the court's approval. (Actually, the entire senate, even IU, voted unanimously in favour of the change). The ecologists are now appealing this in the Supreme Court. Where to start?

Various:

Spaniards – at least the more educated ones – were shocked this week to learn that over 25% of the population thinks that the sun revolves around the earth rather than the other way round and that, à la Flintstones, humans lived at the same time as the dinosaurs (30%!). These and other alarming perceptions have been put together by a survey for the 'Fundación Española para la Ciencia y Tecnología' (here). The story also at El País in English here.

The Padrón rules for use by the Town Halls (in Spanish) here.

Who reads newspapers any more? A question that, above all, newspaper owners no doubt worry about. According to figures released in Andalucía (traditionally not a great consumer of newsprint), last year readership fell by 129,000 andaluces, and almost all the titles (listed here) suffered losses. The most popular newspaper in the region remains as El País, with a readership of some 200,000 (down 13,000 apparently). No doubt, Internet traffic is up.

Franco: an interesting study at Abandoned Footnotes.

From The Guardian: 'Oil spill reaches coast of Gran Canaria. Spanish officials say sunken Russian fishing boat Oleg Naydenov continues to leak up to 10 litres of fuel an hour off tourist island...'. Greenpeace say the situation could worsen. El Huff Post laughs at the politicians as they try and minimise the situation (with pictures and comparisons with the Prestige Crisis of 2002).

'Almost half of ex-pat mothers don't ever plan to return to live in their home country believing that the quality of life in their adopted nation is far better. A recent survey by MumAbroad.com has revealed that 49 per cent of ex-pat mothers living in Spain, France, Italy and Germany never plan to return to their home country to live...'. From The Local.

An interesting historical footnote: Rodrigo Rato's father, the banker Ramón Rato, spent three years in an Almerían jail for illicitly exporting banknotes – to the tune of 81,500,000 pesetas – out of the country back in 1967. It turns out that Rato père once embargoed a company owned by Franco's brother Nicolás – which was, on consideration, probably a bad idea...

News from Iceland: 'The Killing of Basques Now Banned in West Fjords'. It's true, you can't kill 'em any more! The story comes from the Iceland Review.

See Spain

Ten Andalucía destinations: 'More than 1100 kilometres of coastline, two National Parks and cities such as Seville, Córdoba and Granada are the epitome of Andalucía, but there is so much more to this region. Roman ruins, villages that defy gravity, dizzying trails and rivers that appear to be from another planet. This too is Andalucía. Come discover these other destinations, those that aren't on the first page of the travel guides. They will make your jaw drop all the same. This is the ideal place for your next getaway...'. From Eye on Spain here.

You can visit the Museo del Prado (Madrid) in this astonishing promotional video. Watch!

More on the Housing Sector

by Andrew Brociner

In the last two issues, we have been looking at Spain's decreasing population and how it will affect the housing sector. We saw what the population in Spain is expected to look like in the coming decades and how the number of new households set up is already much lower than it was during the boom. Against this demographic trend stands the problem of absorbing a large stock of unsold houses, both old and new. We saw, in fact, that the outstanding stock of houses is being absorbed exceedingly slowly. This week, we continue examining the latest developments in the housing sector by taking a look at prices.

If we look at house prices, as seen in the following graph using Instituto Nacional de Estadistíca (INE) data, which shows prices per square metre for all properties, both old and new in Spain, we can see that prices have not yet started to pick up.


It is clear that there is no significant increase in house prices. And if we break this down into new and old houses, as the majority of houses sold are of second hand houses, we get a very similar picture. There is, in fact, no need to put up the two separate graphs as they are so similar. So, the type of house makes no difference to the price statistic.

If we choose to look at the house price index, we can see here too that it is not moving very much:


Note that as recently as the 3rd quarter of 2014, the value is the same as the 4th quarter of 2013 and while the 4th quarter of 2014 is slightly higher, it is just 1,8% higher than in the previous year. Since their trough in 2012, house prices have managed a gain of only 1,2%. Any way you look at it, there has been no significant increase in house prices at all.

While prices fell by 37% on a national level, there are some marked regional differences, as can be seen on the graph below:


By far the biggest decrease was seen in Cataluña followed by Madrid. As can be seen, these two regions are noticeably different from the rest as both regions went through extensive price reductions. The Comunitat Valenciana follows after that, with Andalucía fairing better. Nevertheless, despite these regional differences, the overall pattern remains the same.

In Cataluña, prices plummeted by about 46% since 2007 and have only clawed back 2,2% in a year. Madrid saw a decrease of 43% and has gained 2,9% in a year and 3,6% since its low point in the 1st quarter of 2013. Cataluña's trough did not come until the 2nd quarter of 2014, which from its peak in the 2nd quarter of 2007, represents a continuous slide of seven years. Andalucía resisted better, decreasing by about 30%, but has only gained 1,8% in a year, which is the national average. And while the Comunitat Valenciana lost 35%, it has gained about 2,8% in a year. So, while the increases in Madrid and Cataluña were slightly above the national average, their initial loss was by far greater.

We can also visualise these results on a map of Spain. The region with the most depressed prices is Cataluña to the north and gradually working our way down, we find Madrid, the Comunitat Valenciana and Andalucía, which has retained its value the most.


We are, therefore, still at the very early stages of any price increases, if we are there yet at all. Prices seem only just to have finished stabilising from their trough in 2012, with some regions, such as Madrid and Cataluña, just barely coming out of theirs, the latter being as recent as 2014. No significant price increase has occurred since. The pattern is the same despite regional differences and irrespective of separating new dwellings from old. After such dramatic and prolonged decreases, we are only just starting to recover a little of the losses. With the population decreasing, few new households being set up and the backlog of unsold houses still remaining, this is understandable. Although some not entirely impartial commentators might jump on any slight percentage point increase, by and large, we are in a period of consolidation.

Finally:

Here's Málaga sensation Diane Navarro with 'No te olvides de mi'. A great voice...

…...

Press notice from AUAN and SOHA

ANOTHER STEP TO PROTECT PURCHASERS IN GOOD FAITH
AUAN and SOHA, the associations campaigning against planning abuses, have released information about an important new step taken by the Socialist Group in the Senate, aimed at giving legal security to third party purchasers in good faith who invest in the Spanish property market. The Socialist Group has presented an amendment to an existing Bill to reform the Mortgage Act (Ley Hipotecaria) and the Catastral Property Act. It is anticipated that the proposed amendment of the PSOE will be debated in the Senate on the 12th and 13th May.
The amendment originated from a proposal developed by AUAN and its sister association, SOHA, in Málaga. According to the legal advisor of these associations, Gerardo Vázquez, ‘the idea of this amendment is to give greater legal certainty to the Property Register. A buyer must be able to rely on what the Land Registry says because that is why it exists. The problem is that there is an interpretation of the Mortgage Act by the Supreme Court that says the Land Registry does not protect innocent third parties against urban problems that have not been noted on the register. That is to say, anyone can buy a property that appears to be perfect according to the Land Registry, with no sign of a problem, but the house could be illegal and this person is not protected by the Register. This creates considerable legal uncertainty which this amendment proposes to resolve so that a third party purchaser has the right to rely on the legality of a construction inscribed in the Register’.
Asked about the chances of this amendment being approved Sr. Vázquez said ‘As I have said before I have confidence in the political parties. I believe that more and more there is an appreciation of the need to work to solve the real problems of the people, and I believe that we should all pull in the same direction to give legal security to the Spanish property market, encouraging investment and social and economic growth. The associations are grateful that their proposition has been supported by the Socialist group in the Senate, and hope that other political groups will join this initiative, because its approval depends on their support’.
Sr. Vázquez added however that ‘this amendment is not the end of the road but it is a big step along the way. AUAN, SOHA and another association in Cantabria known as AMA, have proposed another legislative change, this time to avoid the revocation of a planning permission and the demolition of houses without a guarantee of fair compensation to a third party who did nothing wrong. Because whilst it is true that the recent change in the Criminal Code gives purchasers in good faith some protection against demolition without compensation via the criminal courts, these demolitions can also be ordered by the administrative courts creating the necessity for a change to the law regulating the Administrative Courts. We understand that the PSOE is going to present a bill to the Spanish Parliament to do this. And it must be said that this change is not only being asked for by those affected in Andalucía but also by groups in other parts of Spain. It is especially significant that a few days ago, the Parliament of Cantabria asked for this change to the state law with the unanimous approval of all the political parties in this parliament, including the PP, PSOE and the Partido Regionalista de Cantabria’.

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