Costa Blanca Real Estate | Crisis or not? - Spanish Real Estate forum - Spanish property

Homefinder · 09-03-2008, 04:22 PM

Is there a Costa Blanca real estate crisis?

I have started this thread especially for Colin S. As manager of Hamiltons of London he should better have his finger on the local real estate pulse than anyone else.

So how does it feel, Colin? A slow throb, an inconsistant flutter or what?

Homefinder

Colin S · 09-04-2008, 02:09 PM

Gee, thanks Homefinder, there is nothing like putting me on the spot is there but, as you ask I feel obliged to reply.

I would be an optimistic fool to suggest that there is no property crisis here in Costa Blanca. With the credit crisis and looming economic recession, worldwide property values are falling generally.

Curiously there seems to be the same interest in Costa Blanca property as ever, visitors to Costa Blanca Property | Property for Sale in Costa Blanca are running at an all-time record and we are arranging practically the same number of viewings.

Nevertheless sales are down considerably to around 25% of the peak (2005).

This is obviously not a good situation for smaller estate agencies but Hamiltons has the experience and divergence to take advantage of the situation.

Quite simply, for us it is just a question of having to spend more with each client before we achieve a sale so our current focus is on streamlining and consolidation.

Talking to colleagues elsewhere in Spain it would seem that certain areas, like the Costa Blanca North, are still selling reasonably well and it is easy enough to see why.

The Spanish real estate crisis was caused by the boom in new building and fuelled by availability of cheap money, which created a huge surplus of unsold properties.

However that is not what really happened here as there are relatively few new properties for sale in Costa Blanca North.

In fact nearly all of the properties in our extensive database are re-sales with an average age of over 10 years. In some areas, particularly Moraira, Javea and Jalon the average is considerable older then this.

Also to be considered is the "sub-economy" that exists. The majority of properties for sale are offered by British owners, will be bought by Brits and will be sold by English estate agents (such as Hamiltons of London).
Now that Sterling has fallen so considerably in value, many sellers (who intend to repatriate the funds resulting for the sale) are able to reduce considerably without prejudice to the amount they would have received a couple of years ago.

Yet another factor is, that as the UK economy slides further into recession, more and more English people are selling up and coming to Spain, either to take early retirement or start a new life and the Costa Blanca North is one of the most popular areas for them.

At Hamiltons we are viewing these events with great interest and have recently launched a completely new .co.uk website to focus exclusively on the UK market.

My opinion is, that for a year or so, the real estate market will continue as it is now (slow but steady) and we have seen the worst of the crisis.
Good advice to frustrated sellers is to either reduce for a quick sale or think about renting (short or long-term).

Buyers of course, will probably never again have the opportunities that currently exist and the only real problem is financing.

Colin S

Homefinder · 09-04-2008, 05:31 PM

Thank's for that Colin!

I'll make no bones about, the Costa Blanca Forum has a bit of a crisis as well. The problem is, that although we have hundreds of visitors every day, I cannot get many of them to actually participate. Sounds like the same problem that real estate agents have right now

Hopefully we will be seeing a bit more of you in future. Real estate is an important topic and, with all those offices to manage, I am sure that you could provide same valuable input.

Homefinder

Smiley · 09-04-2008, 05:45 PM

Hi Colin

Nice to meet you. I edit and produce the Smile Magazine.

You offered to answer questions about real estate and I have one.
My Mother has a newish 2-bed flat in Teulada, south side of the Avenida Mediterraneo. She was trying to sell it for months, without success.
Finally she took the advice of your people in Moraira and rented it long-term. That was about six months ago and the situation seems to have deteriorated since then. She still wants to sell but the problem is that this is difficult with a tenent. Currently the rental contract is for one year.
She would probably renew for another year because we cannot forsee any improvement before next Spring.

What we are wondering is: How long will it be, in your opinion, before the market picks up? Is it possible to sell a property that has a long-term tenent?

Smiley

Colin S · 09-05-2008, 06:45 PM

Thank you for your words Homefinder, I will do my best to get here as much as possible.

Hi Smiley, great to talk with you.

Nice to learn that our guys in Moraira are handling the property on behalf of your Mother and I'm sorry they were not able to sell it in the first instance.

You're quite right in thinking that the market has deteriorated in six months, especially where apartments are concerned and therefore getting the price right is paramount to the ability of any Estate Agent attempting to sell a property at present.

We have a new team running the Moraira office at the moment so it may be worth giving them a call and getting them round to take a look and they will give your Mother a genuine and honest market appraisal of the property. Your Mother can then decide if she can afford to sell the property or whether to continue renting the property for a medium to long term investment as the market will not improve for sometime to come.

On the question of having tenants while attempting to sell, it can be quite difficult to do this with a tenant in residence. Obviously, should a buyer be found then the tenancy would have to be mutually cancelled and that could cause problems unless you had a tenant who was willing to do this or a buyer that is looking to buy to rent.

I would suggest that when renting, anyone who is a prospective tenant should be advised that the owner is attempting to sell the property and that agents may need to make appointments to view, this can be added to the contract and if they make things difficult you could threaten them with breach of contract (to be honest you probably wouldn't get away with it legally but they wouldn't know that) but the key factor is to not make the tenancy agreement for more than six months as the majority of the buyers would normally be willing to wait and it is highly unlikely that a buyer would be found as soon as the tenant moved in anyway.

The answer as to how long it will be before the market picks up is purely guess work. I have heard many different scenarios from various experts so it is a case of take your pick. If you are after my opinion however, I firmly believe that we are moving rapidly in to a major recession of the likes not seen for more than 30 years. Recessions however, in the modern day, don't last as long as they used to and if you look at statistics, each recession has shortened in time frame from the last.

With every recession comes a major downturn in the property market and we have seen property prices tumble in recent times, you will see them tumble some more for a while before they steady and I would say there will be at least another 12 months of falling prices (although the falls become less and less each month), after this there will be a period of uncertainty I believe of around 12-18 months where prices remain fairly stable but low and then you will start to see small but significant rises over the next 5 years followed, once again by a nice big bubble bursting boom and here we go again after about 12 -15 years (happy sole eh!).

For blunt and honest advice, if your Mother does not need to sell and is happy to wait 5-7 years using the property as a medium to long term investment then that is what she should do, selling a 2 bed apartment in Teulada would mean dropping the price to under 100k if you are to compete with similar properties being sold by very desperate constructors and banks.

I hope this helps and sorry for rambling on a bit but I would rather try to give the whole picture than just part of it and if you have any other questions I´m more than happy to answer them if I can.

All the best and I hope I've not driven you or your mother to despair with such a miserable forecast.

Colin

Homefinder · 09-05-2008, 07:22 PM

Thank you Colin, that was an extremely interesting post that is likely to lead to a lot more discussion.

Quote:

I would say there will be at least another 12 months of falling prices (although the falls become less and less each month), after this there will be a period of uncertainty I believe of around 12-18 months where prices remain fairly stable but low

The "Experts" are saying that UK property values will continue to fall until 2010 and then quickly rise to a new peak in 2013, so you have probably been looking at this a well when you say -

Quote:

and then you will start to see small but significant rises over the next 5 years . . .

I think that is also about right. The UK has always been this area's biggest customer for real estate and everything seems to start here after a delay of a year or 18 months.

Quote:

. . . once again by a nice big bubble bursting boom and here we go again after about 12 -15 years (happy sole eh!).

That I don't agree with! How on earth can you believe that Spain would be stupid enough so create another bubble of surplus properties and let it happen again.

Renting is going to be a good deal for sure because, as the UK slides further into recession, more and more of them are going to want to get out of the country and the majority won't be able to afford to buy here.

Colin, you may want to add to this one so I am starting a new thread "Costa Blanca Estate Agents Closing Down". I am sorry if it puts you in a spot but I can see you you are neither the type of guy who "beats about the bush" nor "hides his candle under it".

Homefinder

Smiley · 09-06-2008, 03:39 PM

Thanks for that, Colin. A very interesting reply.
We did actually work that out for ourselves and the apartment is rented long term.

Smiley

Colin S · 09-08-2008, 06:43 PM

Quote:

. . . once again by a nice big bubble bursting boom and here we go again after about 12 -15 years (happy sole eh!).

That I don't agree with! How on earth can you believe that Spain would be stupid enough so create another bubble of surplus properties and let it happen again.

After 8 years all those ddevelopers who went out of business this time round will be replaced by another bunch taking up the reigns along with another bunch of Estate Agents who simply don't know how to value a property. I think they call it greed and while the bursting bubble won't be anywhere near as big, it will almost certainly happen again, it doeas everywhere eventually.

Quote:

Renting is going to be a good deal for sure because, as the UK slides further into recession, more and more of them are going to want to get out of the country and the majority won't be able to afford to buy here.

The only problem I forsee here is that there is almost certainly going to be a bubble burst for the rental market as far as what can be charged on a monthly basis due entirely to owners not being able to sell and putting their property up for rent. We can see it happening now and it seems to be more rapid than I envisaged.

Colin, you may want to add to this one so I am starting a new thread "Costa Blanca Estate Agents Closing Down". I am sorry if it puts you in a spot but I can see you you are neither the type of guy who "beats about the bush" nor "hides his candle under it".

Personally, I like beating around the bush

I'll answer that one tomorrow though as I'm running out of time.

Homefinder · 09-08-2008, 07:52 PM

Quote:

The only problem I forsee here is that there is almost certainly going to be a bubble burst for the rental market as far as what can be charged on a monthly basis due entirely to owners not being able to sell and putting their property up for rent. We can see it happening now and it seems to be more rapid than I envisaged.

Sorry but I cannot agree with that one. The rental bubble burst on Sept 11th 2001, least way what was left of it as it was, at the time, just deflating quickly.
Events since then have just created a surplus and, until Spanish tourism doubles or trebles (which won't ever happen) there will not be another rental bubble until the surplus properties crumble to dust.

Richie - We need a smiley for DOOM & GLOOM

Homefinder

Mark Paddon · 09-11-2008, 05:02 PM

I agree with Colin. The market is slower but steady. I have been busy with buyer surveys all through the summer and they just keep coming, however I have seen more Dutch and Irish (already on the Euro), while some Brits are playing the risky waiting game or suddenly find that financing or selling up back in the UK is a problem. Their desires to move to Spain have not changed, they just have a few obstacles delaying them. For the lucky ones that have cash or a good line of credit there are certainly some bargains to be had which outweigh exchange issues as many vendors reduce prices by up to 30%. The owners of very well located smart homes may well be more stubborn, rightly sticking out for a fair price.

I would advise all buyers not to delay taking advantage of the current market. Purchasing completed properties with established local facilities is however strongly advised (many off plan investors have burnt their fingers). There is a great choice of property in the Javea, Moriara, Calpe coastal zone at surprisingly reasonable prices, villas are still popular but a recent build trend in penthouses and duplexes has created some alternative very livable alternative options to the traditional detached villa with pool. Investing in a run of the mill apartment carries more risk, though there are plenty to be had cheap from speculators. As always buyers should not be blinkered by price alone and independent checks of the structure and legals are important for both resales and newbuild.