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Business Over Tapas (7th  December 2013)

By Lenox Napier and Andrew Brociner

miércoles 22 de octubre de 2014, 11:21h

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]  

Note: Underlined words or phrases are links to the Internet. Right click and press 'Control' on your keyboard to access.

Editorial:

In Spain, we like our fiestas. This Friday is Constitution Day and on Sunday is the Día de la Inmaculada, with an extra day off on Monday in Andalucía, Aragón, Asturias, Castilla y León, Extremadura, Murcia, La Rioja and Ceuta. A four-day weekend. For industry, this can mean two days lost, depending on the region, but for the tourist resorts, it means a well-needed boost. For our friends the traffic police, there will be five million cars on the roads to wave past with a cheery smile. Check to see when your local supermarket and bank is open.

Housing:

'The endless confusion and heartbreak being caused by Spain’s answer to corruption within the construction industry is likely to rebound on those who purchase expensive homes to obtain residency permits. The government’s ham-fisted attempts to deal with the ex-pat property scandal by enforcing regional interference in legally built homes is expected to result in a million demolitions. 100,000 homes, many of which received local planning permission, are set for demolition at the present time as regional governments have reversed the given permission.
At the same time, the government is encouraging wealthy non-EU citizens to purchase expensive properties in order to be given permission to reside in Spain. The government is also aggressively marketing the country’s estimated three million empty homes at bargain prices designed to appeal to ex-pat retirees'... Found at Emigrate. (Perhaps this report is a little bit exaggerated?) The article ends thus: '...Real estate lawyers are recommending that potential ex-pats check everything twice. Given the complexity of the scandal, a better idea might be to buy in another country'.

'Spanish real estate agents believe that Murcia will draw a good amount of interest in the near future after the grand opening of the long anticipated Paramount Theme Park. The theme park is expected to draw tourists in millions, and as has been the case in the past, many of these tourists are expected to make investments in the region’s real estate market. The theme park will be opened in 2015, and optimism is slowly returning to the troubled market... …Once the park is up and running, interest from international buyers is set to increase to a significant effect. It is also expected to have an effect on property prices and sales come 2015'... From Property Abroad.

'...A renewal of interest in Spanish properties comes as great news for people who wish to sell their real estate assets after having held on to them during the hardest of times. Real estate agents in the Iberian peninsula say that several thousand non-EU residents can be expected to visit Spain with the intention of purchasing that perfect property in a sunny location.

They cite the Golden Visa as the most determining factor as the visa-free travel they can enjoy in 26 different countries within the Schengen zone plays a huge role in luring them to Spain'... another, more generalised article on house-sales appearing in Property Abroad.

Expansión lists some bank-owned properties in Andalucía for sale at remarkable discounts here.

An agency called Spanish Property Finder has been writing to me for years with what appear to be interesting offers. Find them here.

Tourism:

Spain's AENA-controlled airports are not making enough money according to Preferente, which says that only eight (it was eleven) of their 39 airports were in the black this year. These are Bilbao, Ibiza, Lanzarote, Gran Canaria, Tenerife Sur, Sevilla, Barcelona and Palma de Mallorca. Meanwhile, Alicante, Madrid and Málaga have joined the losers along with the remaining airports of the system. Some, like Almería, Cordoba and Granada are of concern for their downturn in passenger numbers.

'Captain and pilot licenses for recreational vessels in Spain will change as from 2014. The whole scheme is coming into the 21st century! All the previous recreational captain licenses for small vessels are being swept away, and a single new license is being introduced (called the PER, Patrón de Embarcación de Recreo) which will allow you to captain recreational boats of up to 24 meters'... From David Jackson.

Finance:

Unemployment was down in November, but as Público puts it: 'The number of unemployed registered in employment offices fell in November by 2,475 people. At the same time there were 66,829 less people affiliated with the Social Security, which indicates that citizens are removing themselves from the lists while still looking for work'.

El País in English is a bit more sanguine: 'Jobless claims fell for the first time ever in November in the current historical series since 1989 as the Spanish economy showed signs of stabilizing after pulling out of its longest recession in decades.

According to figures released Tuesday by the Labour Ministry, the number of people officially registered as unemployed fell 2,475 from October and by 98,909 from the same month a year earlier to 4.808 million.

However, the number of people signed up with the Social Security system declined by 66,829 to 16,293 million. The National Statistics Institute’s Active Population Survey for the second quarter showed the number of people looking for working at just under six million, with the jobless rate around 26 percent'...

'Standard & Poor's agency cut the Netherlands' credit rating last Friday, reducing the euro zone club of full triple-A nations to just three, while rewarding Spain for efforts to reform its public finances.

S&P lowered the Netherlands, which is suffering from an anaemic economy, slumping house prices and falling consumer confidence, to "AA+" from "AAA". This left Germany, Luxembourg and Finland as the only members of the 17-nation euro zone with the top rating from all three leading credit agencies. However, it raised the outlook for Spanish debt to stable from negative and upgraded bailed-out Cyprus, highlighting diverging fortunes within the common currency bloc'... From Reuters.

From El Confidencial comes a message from Bill Gates: '..."For the time being, no thanks". This is the answer given by Bill Gates' team of managers to several Spanish brokers keen to offer new opportunities for investment in Spain after the purchase of 6% of FCC by the Billionaire. The explanation for the refusal is that the founder of Microsoft is very unhappy with the political use that was made of his name following the first financial foray by Mr Gates in our country'...

According to PriceWaterhouseCooper, Spain will not renew the jobs lost to the recent crisis until 2033. The country also won't experience the kind of growth seen prior to 2008 until the same date. An article in El Mundo quotes the Minister of Economy Luis de Guindos as saying that the report fails to take into account the intensity of the recuperation in Spain.

'A year and a half after receiving a 41.5-billion-euro bailout to clean up the sector and with floods of cheap money available from the European Central Bank (ECB), Spain's lenders continue to be loath to do what they are meant to do: lend. According to figures released Monday by the Bank of Spain, credit to households in October fell by a record 4.7 percent from the previous month to 79,940 million euros. Credit to families has been falling since the middle of 2010, largely as a result of banks tightening the tap on home loans, which also fell 4.7 percent in October to 614,860 million euros, the lowest level since 2007 - before the current crisis broke and a massive property boom started to go belly up, hastening the need for the bailout'... From El País in English.

Corruption:

'Both the wealthiest Spaniards and the big companies share between them 71.8% of the total tax fraud in Spain, a percentage which represents a revenue loss to the State of more than 42,000 million euros annually, according to a recent report by the tax-collectors Gestha. To curb this situation, Gestha proposes stepping up the fight against fraud among these large fortunes and to create a new wealth tax at State level'... From ABC. Yesterday, Wednesday, the head of Gestha resigned his post in disagreement with the General Director of Hacienda Santiago Menéndez (more here).

The UGT union is in trouble in Andalucía after a series of revelations of abuse and fraud appearing in El Mundo for the last few weeks. On Friday last week, the regional director for the union, Francisco Fernandez Sevilla, resigned from his post (while protesting his innocence). Now the Junta de Andalucía is taking a hand, and is seeking 1.8 million euros from the union in faked receipts paid by the regional government. The President of the Junta, Susana Díaz, says that 'we will go to the courts,  regardless of who is guilty'. Other receipts for a further 7.5 million euros are now under investigation. More in an article in El País here.

'Spain has slumped 10 places to a rank of 40 in a global index of perceived official corruption after a spate of scandals in its ruling center-right ruling party and the royal family, watchdog Transparency International (TI) said. In its Corruption Perceptions Index for 2013, the anti-graft organisation said Spain was the second biggest loser of points alongside Gambia, Mali, Guinea-Bissau and Libya. The only country to tumble further was Syria, rocked by civil war.

Spain’s five-year economic slump, which has forced it to adopt tight austerity laws, exposed how cosy relations between politicians and construction magnates fed a disastrous housing bubble'... From David Jackson.  The full list from Transparency International UK is here. They say: '...Stand-outs this year include Syria and Spain... …In Spain the CPI score fell 6 points to 59/100 points. This year the country suffered its largest ever corruption scandal over political party funding. Both the Spanish Prime Minister and Royal family have been embroiled in corruption scandals'...

Politics:

From Typically Spanish: 'The Prime Ministers of the United Kingdom and Spain, David Cameron and Mariano Rajoy, met last Friday to coordinate their answer to the independence aspirations of Scotland and Cataluña. London and Madrid have faced the measure in different ways, the first has accepted a referendum and the second rejects the plan, but Rajoy and Cameron did agree on the need to explain to the citizens the consequences which a separation would have.
The men chatted at the start of the summit between the EU and its eastern neighbours, held in Vilna, Lithuania. Both leaders coincide in, if Scotland or Cataluña become independent they would automatically be thrown out of the European Union and both would become ‘a third country’ with all the consequences that would involve, such as exit from the single market, the end of the free movement of citizens, and the loss of financing from the European Central Bank'...  There is more on this at The Guardian.

Essay:

The Russians Are Coming

(My article in Spanish Shilling – not to be taken too seriously)

The cliché of all bona fide estate agents, ‘the green shoots of recovery’, is beginning to resound again along the costas as properties are being snapped up by foreigners. Paying usually in cash, the buyers have been doing their homework on the Internet and they are buying cheap discounted apartments by the hundreds. An estate agent I know says that sales have increased in the past year by a satisfying 200%, which probably means they sold one apartment in 2012, and so far in 2013, they’ve sold two.

This time, we are told that it’s the Russians who are buying. Another local agent has even learnt to say yavas lubloo to anyone wearing a shapka-ushanka – one of those fur-hats made from mammoth-hair. Although personally, I suspect the Russians will be pointing their wallets towards Marbella rather than Mojácar, and no doubt they will be paying in cash. The new offer of free visas and the entrance to the 26 countries who signed the Schengen Treaty, to any non-European who buys or invests a mere 500,000€ in Spain, has its undoubted attractions. For both parties. To not put too fine a point on it, the Spanish Hacienda is hardly bothered by where the lolly comes from, as long as it’s coming. Mansions, heliports, large swimming pools and an unbreakable steel safe in the basement.

For the more ordinary buyers from Omsk, one- or two-bedroomed apartments in the resort towns and estates of the Spanish coast are in demand, usually those going for under 100,000€, spaseebo.

Other nationalities too. The British are still shy, having seen too many ‘Paradise Lost’ TV shows and read too many articles about Len and Helen Prior, now cresting their sixth anniversary in Vera among the ruins of their home. But the Belgians, the Germans and the Scandinavians are all waking up to the perennial offer of good weather and cheap real estate that Spain is once again able to offer.

These homes being sold by the agents are doing the major banks little good however. The typical toxic promotions now held by the new ‘Spanish Bad Bank’, the Sareb, were built as apartment blocks in and around the country’s major cities. The Spanish, thanks to the extreme crisis, can not afford to buy them, while the foreigners simply don’t want them. Barrios on the edge of a bus line in Madrid or Seville will never be the haunts of Europeans or Russians, who would be as out of their depth in an all-Spanish environment as a group of Spanish jubilados who had all inexplicably moved to Glasgow.

Other foreigners are putting up their hands for apartments as well; but this time, they like the City. In Alicante, for example, Algerians are snapping up second homes. It’s just a twelve hour ferry to Oran. A notary in Alicante is on record as saying that some 25% of all house registrations under his pen have come from Algerians, while a local agency called Tecnocasa claims that well over half of its sales this year have gone to that particular market.

However, it’s the Russians who are buying the most. According to Masa International, Spain is seen in Moscow as the fashionable place to have a holiday home: in fact, there are now 250 agencies in that city who specialise in Spanish sales. While the Spanish have never quite understood why foreigners like ‘to stick together’, crafting Spanish towns and resorts as far as possible into mono-cultural conurbations, like the Germans with Mallorca or the British with their Fuengirola or Mojácar, it’s apparent that the Russians prefer either Marbella (the rich ones) or the Costa Dorada for the rest. The agency Europa Dom in Tarragona claims that 75% of all their sales are to Russian buyers.

All of this said, with green shoots in the newspapers and Russian language menus in the restaurants, one must not ignore the fact that the majority of homes bought in Spain this year are far removed from the Coast and have been quietly acquired by Spaniards...

Various:

'The new law of Citizens Security, the usual don't blink at a policeman stuff found in collapsing right wing societies, with fines up to 30,000 euros and rules against disrespecting the Flag, State or Symbols, whether nationally, regionally or locally, has a few sillier bits tacked on the end, according to El Huff Post. These small-beer (up to 1000 euro fines) infractions include, pitching a tent in the street, playing football in the street, pointing a laser light at a policeman, to lose your ID three times in five years, and to join in a botellón (a street party)'... From The Entertainer Online.

Since there's not much that can be done (legally) about the Ministry of the Interior's plans to curb our natural exuberance, we are left with comedy. Here is No Sin Mi Mochilla with 'Fifty Things That Offend Spain' – starting with: Resigning offends Spain; Gathering on the street in groups of two or more offends Spain; Going out for any reason, besides to buy La Razón (a right-wing newspaper) offends Spain; Remembering that there are six million unemployed offends Spain... (well, you get the drift).

'Liquidators escorted by police evicted staff from a public TV station in the Spanish city of Valencia on Friday, after an order to shut it down.

They moved in after staff at the loss-making station defied the closure order by the regional government and continued broadcasting. Valencia's government took the decision to close RTVV after losing a court battle over staff cuts. It is the first regional TV station to be closed down as austerity bites'.. Story and Video at the BBC News.

The ongoing crisis, together with the 21% IVA on cultural spectacles – including of course cinemas – is doing damage to the sector.  According to the ABC, 1,978 entertainment companies closed their doors last year with the loss of 24,100 jobs. These include the closure of 16 theatres, 35 cinemas, 129 publishers, and the fall in the number of bull-fights (!) from 2,290 to 1,997. Figures from 2012.

Why does Spain have so many autonomous regions, asks I Wonder Why. A fascinating essay on the subject here.

If anything in the Foreign Media has upset the Spanish this week, it's talk of the resurgence of far-right politics and apologists for Franco. Personally, I'm not so sure... but here's the Wall Street Journal with an excerpt from their 'Franco's Legacy Rattles Spain': -  '...Now some Spaniards worry that the failure to thoroughly confront Spain's authoritarian past—what has been dubbed "the Pact of Forgetting"—has left the door open to an emergence of extremism in a new generation devastated by years of economic crisis and 50% youth unemployment. "In these moments of crisis and disappointment with politics, this creates a Petri dish for extremist movements, as they provide simple answers to complex problems," said Jordi Rodriguez, professor of politics at the University of Navarra'...

The Traffic Police must collect a certain amount of fines to receive their full monthly pay, apparently. An old story to frighten children? Perhaps not. Forthwith VozPópuli with: 'They have us as tax collectors: it's a diabolical competition to not lose wages' based on talks with members of the Guardia Civil members' union AUGC. Here's a taste: '...In Madrid there are approximately 25,000 fines a month; yet in Cadiz, for example, one of its three detachments of traffic police has increased by 400% the number of fines in the last two years'...

A horrible video and story of mistreatment of galgos, the lovely Spanish hunting greyhounds. There are 50,000 abandoned or killed by their masters every year. Report found at La Vanguardia. 

Brits living in other EU countries (pictorial). Total: 2,200,000 of them/us.

Letters

Hola Lenox:

Lo recibo y leo con interés. La pulpo de la corrupción tiene demasiados tentáculos. Cortos uno y al día siguiente aparecen dos. La salida de la crisis será lenta y sufrida. Muchos quedarán en el camino.

Un cordial saludo,

JAntonio desde Málaga

Hi Lenox,

Good news! Spain less corrupt than Italy and Rwanda!

Un Saludo, Ric

Finally:

Ibiza? - '"Absolutely you should go – but with a time machine." That was David Dewaele's answer to the question: is Ibiza still worth a visit today? Time-travel might be a stretch, but a mooch around Ibiza: Moments in Love, at the Institute of Contemporary Arts in London until 26 January, rolls back the years, revealing how the island was in the 80s via club posters, photographs and books. Seeing the show is like stepping back into one of the island's famous clubs: a release from daily cares'... From The Guardian.

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