2.8 million new dwellings?
An investigation by Acuña & Asociados reveals that property promoters owe Spanish banks and saving banks an estimated 143,000 million euros for loans to purchase land for construction. That land includes projects started but not completed; the projects approved but not started up, and projects that are in various stages of preparation. The total number of dwellings, which might be built on the land, is estimated at 2.8 million……………
(Read more under paragraph “2.8 million new dwellings?” below)
Property expert: “Prices down 30% more”
In a recent interview Jose Luis Ruiz, the well known author of “Adios, ladrillo, adios” (ladrillos are house bricks) and a Director of the Madrid based British property agency Knight Frank, warned against the Governments assurances that now is a good time to buy a dwelling. Ruiz expects property prices to fall another 30%, in addition to the retraction of 20% which has already taken place.
Ruiz-Mateos empire down for second time
Due to non-payment of social security and repayments on loans to the banks, ten companies with in the Nueva Rumasa Gropup, including the football club Rayo Vallecano, have entered bankruptcy proceedings. Nueva Rumasa is one of Spain's largest conglomerates and is owned and operated by the Ruiz-Mateos family. Recently 140 million euros in company bonds were sold to 5,000 investors, who now stand to loose most of their money. The debts are estimated to be in the region of 700 million; 10,000 jobs are in jeopardy.
José María Ruiz-Mateo started his business by exporting wine to the UK. In 1983 the Felipe González Government expropriated his previous company, Rumasa, alleging he had failed to pay millions of pesetas in taxes and the company was virtually bankruptcy.
Spanish nuclear plants, longer life
The Spanish Parliament has approved a change in the law regarding Sustainable Economy, which permits the extension of the life-span of Spanish nuclear plants. The Government party PSOE had initially proposed the plants should operate for 40 years, their designed working life, however, they have changed their opinion and necessary alterations in the law were approved with the support of PSOE, PP and the moderate nationalists in Catalonia and the Basque Country.
Spanish car industry in danger?
Due to new legislation by the Government, obliging vehicle producers to take back cars, which concessionaries do not manage to sell within 60 days, the leading Spanish car producers have threatened to close down their factories in Spain. Until recently, the producers have sold to their distributors the cars they have indicated they would be able to sell.
Confusion on health care for EU pensioners
Last week the press informed us that the European Commission would take Spain to the European Courts for refusing EU pensioners access to free medication whilst they were residing temporary in Spain. We ignored the reports, because we know foreign residents have the same rights as Spanish citizens and that non-resident Europeans receive the health care required, albeit that some times have certain bureaucratic hurdles to negotiate.
Several other foreign and Spanish publications, some of which are usually well informed, also printed the confusing information.
Foreign residents in Lliber in election pact with PSOE
Foreign residents in Lliber (Alicante), most of them part of the local association “Abusos Urbanisticos Lliber NO”, following discussions with other parties, have formed an election platform with the local PSOE. The candidate list will include foreigners some of whom will be towards the top of the list.
Lliber has a number of illegally constructed dwellings. The new municipal corporation will finalize the General Plan to normalize the urban plan situation.
Zurgena approves town plan – will Junta accept it?
The mayor of Zurgena (Almeria) has told foreign owners that the municipality will not continue its negotiations with the Junta de Andalusia, and that it has decided to approve a proposed general plan, which will legalise 400 illegally constructed houses. The regional government has 3 months to protest against the decision.
The owners association, AUAN maintains there are 1,000 illegal houses in the municipality. In 2008, the mayor was arrested for issuing building licenses on land not zoned for construction; he awaits trial.
“Without sentence there is no crime”
The PP leadership is delaying its final approval of Francisco Camps as their candidate for President of the Valencia Region. Camps on his side has tried to declare himself as the candidate before the court proceedings start about his part in the corruption drama “Gűrtel”.
Honorary President of the party, Manuel Fraga has declared: “As long as there is no sentence, there is no crime.”
2.8 million new dwellings?
By Per Svensson
The very competent consultancy company Acuńa & Asociados has in a resent study found that the land owned by promoters (or by the silly banks they borrowed money from based on inflated valuations of farm land) may bless the country with an additional 2.8 million dwellings if the speculative promoters should suddenly receive the funds needed, and if no part of the public administration has the insight and gall to stop them.
How could such an insane situation develop? Let's try to identify some of the responsible for this national tragedy:
The Governments of Aznar and Zapatero, legally smoothing the way for the promotion and construction industry, removing existing restrictions in the planning process and transferring authority in the construction sector to the regional authorities, at the same time giving the taxpayers substantial fiscal incentives to buy a dwelling.
The regional and municipal authorities, very close to promoters and builders: In addition to the personal “gifts” received, the property industry became the main tax payers and provider of jobs. The continued approval of new property plans (bigger and bigger) developed into a drug for the public administration.
Some shady companies pretending to carry out market research, but in reality only providing the music the promoters wanted to hear, said there were “no limits to the number of dwellings Northern Europeans wanted to buy under the Spanish sun, even at prices equal or superior to property prices in the north of Europe.” Some foreign language publications in Spain repeated the fairytales, supported by property industry adverts.
The banks and saving banks, handed the promoters enormous amounts of money, often based on speculative valuations for bad farmland, which the promoters and politicians assured them they would transform into building land for 'x thousands' of dwellings (and a golf course). Now the Bank's debts, to a large extent, have been “nationalised” and are now to be paid for by the taxpayers, pensioners and future generations.
I would propose to the Government that an independent commission be appointed to evaluate the damage caused to the national economy, the deterioration of the living standard of millions of Spanish families and the future of most young people. This commission should also weigh up the possibility of some of the actors in the national tragedy being accused of high treason against the Spanish people.
Of course, the Government will not listen to or heed such a proposal; they would be the first to be investigated.
Will the 2.8 million dwellings be built?
Do not discard the question without considering the interests involved:
After 3 years of waiting in vain for the market to come back, the promoters are becoming desperate for new business. To sell the existing stock of dwellings (mostly owned by the banks) is not a business for them, their main interest is to construct new dwellings.
Also the regional and municipal leaders are more interested in new construction (fresh money into their pockets, tax income from the approval of new projects and building licenses, new jobs for workers and support industries).
The national government is also anxious to get the construction industry going again (reduction of unemployment, higher tax income, better chances in elections).
But what about the banks, would they be left holding "the poisoned chalice”? They would probably ask for and get the funds needed to avoid bankruptcy (that is how the market economy functions, is it not?) with some control mechanism to finance the new wave.
What about the ecological impact of another round of construction? The answer would be: “In this crisis situation, the most important factor is to get the economy going again and provide jobs for the unemployed….”
Hooray for the market!
Probably the only obstacle to this dreary scenario would be the foreign market say loudly and clearly "No" and the people from abroad who really are fond of Spain, refusing to be drawn into a process which would mean the destruction of Spain's coasts and islands.
Another 2.8 million dwellings would be the bricks that finally broke the camel’s back!
Revolutions in Arab countries –
Hope for Spanish tourism
By Per Svensson
The successful popular revolts in Tunis and Egypt, with the assistance of the Internet, are spreading to other North African and Arab countries. Several of the countries affected, due to sunny climates and low prices, have attracted large numbers of Northern European tourists. With extensive television reports of the massive demonstrations, brutally repressed by military and police, resulting in a substantial number of people killed or injured, tourists and tour operators are now shying away from the area. The tourist and hotel industry in Tunis and Egypt is on its knees and will not recover as long as brutal and corrupt leaders cling to power and deny their people democratic rights and a fair standard of living. A million tourists left Egypt during the 18 days the popular uprising lasted, a loss of 1,000 million dollars to the country.
Whither the tourists?
I am sure the smart, experienced tour operators have saddled other horses for the coming tourist season and will be sending them into the race for high market shares. Reports from recent tourist fairs confirm this and the experienced and sure-footed Spanish tourist horse is amongst the leaders. Especially families with children will avoid any risks, choosing the well known Spanish beaches, even if they are crowded with tourists and more or less finished building projects.
The more adventurous may prefer travelling to the new tourist Mecca of China, or a part of the great North American continent. Reports indicate that other countries with a tourist potential, including Turkey, Bulgaria and Croatia may benefit from the revolutions in the Arab countries. Spain may not advance in the rankings of the tourist countries, which we published recently, but more important is to fill the existing hotel rooms and give work to tourist industry employees.
The latest statistics
Last Sunday the Ministry of Tourism gave me the following numbers on foreign tourism, updated to December last year:
Total number from the beginning of 2010 was 52,677,187; 40,558,916 arriving by air (76.9%) and 10,516,269 (20.4%) by car.
Most of the tourists, 510,027, came from the United Kingdom (19.7% of the total), followed by Germany, 377,468 tourists (14.6%), France 378,460 (14.6%); the Nordic countries 256,515 (9.9%), Italy 177,177 (6.9), Holland 103,456 (4%), Belgium 88,858 (3.4%), Switzerland 58,500 (2.3%) and Ireland 43,080 (1.7%).
Tourism from UK fell 13.7% compared with same period in 2009, German tourism fell 4.6%, the number of French tourists increased 18.7%, the Nordic countries increased 11.9%, whilst Holland fell 2.4%.
The day before sending out this report the Ministry said tourism to Spain was up 4.7% in January, due to the situation in Egypt and Tunisia.
The most popular areas
Catalonia had most foreign tourists, with a total of 13,176,628 (proximity to the boarder with France for tourists coming by car and the popularity of Barcelona) with the Balearics as runner up with 9,177,780. The Canaries had 8,610,575 foreign tourists (summer all year), followed by Andalusia with 7,437,433 and the Valencia Region with 5,023,947.
Tourism to Andalusia fell 22.5% compared with the same period in 2009, the Balearics fell 18.7%, the Valencia Region fell 7.2%; Catalonia 4.4; whilst The Canaries improved by 2.4%.
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