Sharp fall in real estate share value in Spain

Following sharp rises in property prices over recent years Estate Agents suffered a sudden fall in value on the Spanish stock market yesterday.

This collapse in value brought back memories of the damage suffered by internet companies when the technology bubble finally burst. Many analysts believe that property prices have blown up far out of proportion partly due to property speculation. Yesterday the Valencian Estate Agent, Astroc, suffered a spectacular fall in value on the stock market. However, what is not yet clear is whether this precedes a crisis in the housing market or is just an isolated incident.

The evolution of the small estate agent, Inbesòs, showed how important speculation is. Following a fall of 26% at the opening of the market it then shot up by 37% giving respite to some nervous investors. Infact Inbesòs has risen by 700% in three years and it is not even one of the most profitable in the sector.

The government played down the importance of what happened in yesterday’s stock market saying that some sectors had experienced excessive growth. It considered that people should not talk of a collapse but that it was a mere correction following historic highs in recent years. It also said that the value of Estate Agents continued to be higher than 12 months ago although some companies had grown out of proportion to their value which gave rise to the idea of a crash in this sector of the stock market.

The Governor of the Bank of Spain, Miguel Ángel Fernández Ordóñez, denied that the collapse in the value of various companies in the sector could be considered as an indicator of the property bubble bursting. He said that on the stock market rises and falls were never slight.

Fernández Ordóñez repeated that there is a gradual slow down in the property market and that prices were still far from crashing. The Governor of the Bank of Spain reminded the press that property prices grew 7% last year compared to 17% the previous year.

Madrid and the Mediterranean coast most popular with builders

75% of new flats built in Madrid and parts of the Mediterranean

Over 900,000 building licences were granted last year, 11.9% more than in 2005, which resulted in the construction of 818,573 flats or houses according to the Spanish Association of Architects.

Out of this total 830,000 flats were destined for private housing (vivienda libre) which roughly translates into a 13% increase on the previous year and just 75,489 were subsidized state housing (vivenda protegida - VPO) which only signifies a 1% increase.

The majority of new flats and houses were built in Madrid or parts of the Mediterranean. In fact, three quarters of the building licenses were destined for these two areas.

VPO construction accounted for just 8.2% of the total of new construction in 2006. In Madrid just 1 in 4 new flats which is approximately 18,730 flats were destined to be VPO last year. Andalucía came next with 11,498 VPO flats and Catalunya with 7,094 VPO flats. In some autonomous communities less VPO flats were built in 2006 than the previous year. For example in Navarra there was a drop of 31.7%, in Galicia there was a drop of 28.4% and in Castilla y León there was a drop of 24.5% while the most significant advances were made in Cantabria, La Rioja and Baleares in the construction of VPO flats.

Dangers of buying property in the Region of Valencia

Foreign Residents Association warn against buying property in the Valencian Region

The Association of Foreign Residents called ‘Citizens of Europe’ based in Altea, Alicante sent out a press release yesterday in which they recommend against buying property in the Valencian Region so long as there is no change in the urban laws there which in their opinion are abusive.

The association has 3000 members, all of whom are foreign residents living on the Mediterranean coast as well as the Balearic Islands and the Canary Islands. However, the majority, two thirds, live in the provinces of Alicante, Valencia and Castellon.
Their spokesperson said that in the present situation they could not recommend buying a property in the Valencian region to anyone whether they be Spanish or a foreign resident if urban laws are not radically overhauled as proposed by the European Parliament.

‘Citizens of Europe’ was founded in 1993 following the Maastricht agreement in order to provide information, encourage participation and integration of European citizens in Spain. According to this association overcrowding, illegalities and corruption have been accurately described in a report by the European Parliament Petitions Committee which recently visited the region.

Despite the report and the recommendations made by the European Parliament the Valencian Government has refused to amend urban legislation in order to protect property owners and buyers.

The European Parliament Petitions Committee last week approved the report which received the unanimous backing of all groups apart from the Partido Popular, Spain’s main opposition party. The report was compiled following a visit by the EU Petitions Committee to Almeria, Madrid and the Valencian region last month to investigate the thousands of reports about urban abuses in Spain. It describes many irregularities in urban laws in Madrid, Valencia and Andalucia.

The report recommends creating independent commissions to mediate in disputes over urban projects and that property owners who are affected by new building projects receive adequate compensation.

Last week Michael Cashman, a British member of the EU Petitions Commission, presented 15,000 reports of urban abuse in the Valencian region made by EU citizens.
The European Parliament has asked the Spanish Government and the regional Authorities to recognise the legitimate rights of property owners who acquired their properties legally and to define precisely under what circumstances the appropriation of a property is justified.

In addition it also recommended that regional organisations which defend the rights of their citizens be given the power of arbitration in special commissions which look at disputes over urban planning.

Related:
Urban development in Spain and irregularities
EU to inspect urban policy in the Costa Blanca

Recommended lawyer in Costa Tropical

Given the increasing number of visitors who contact us requesting names of reputable lawyers all over Spain, last year we signed an agreement with the Spanish branch of an international network of lawyers called Eurojuris. According to the terms of this agreement, all lawyer members of Eurojuris are committed to giving prompt, bilingual and highly professional services to the clients we forward on to them, and to charge them highly competitive rates (one of the problems our visitors often face is being overcharged by their legal representative during a property deal). They, importantly, have no contact with the property sellers or agents being used by our visitors, and your interests are the only ones they are interested in serving.

Eurojuris keeps us informed of the progress of all the clients we forward on to them and satisfaction level is 100% as so far all the property buyers forwarded on to them by us have been delighted with the service received. The network is one of Spain's most highly respected associations of solicitors. See below the experience of one satisfied customer:

Dear Madam

Sometime ago I approached Euroresidentes (email: euroresi@euroresidentes.com) seeking the name of a reliable
lawyer that I could use to handle the proposed purchase of a property in the
Almunecar area of Granada province. I was put in touch with Eurojuris Espana
and you kindly directed me to a firm in Almunecar.

I have recently successfully completed the purchase of the said property and
wish to put on record my sincerest thanks for directing me to such a top-class professional firm of lawyers. From the moment I first established contact with the partner in the firm - Irina Sviridovitch - I was extremely impressed with the efficiency with which my enquiries were answered. All emails and phone calls were returned on the same day or the following day. Clear, definitive answers were provided to all matters raised.

The purchase of the property necessitated 4 separate visits over 6 months to Almunecar. During my first visit Ms. Sviridovitch took me through the buying
process and explained in detail, yet in understandable layman's' terms, all
the legal aspects to the process. Fees were agreed at the initial meeting
and these were very reasonable.

For the subsequent three meetings Ms. Sviridovitch facilitated our requests for meetings at particular times and dates. As we were travelling with a three year old and an infant it was sometimes difficult to co-ordinate visits with estate agents to prospective properties but I can say, hand on heart, that we did not encounter any such difficulty in our dealings with our lawyer. Ms. Sviridovitch was extremely flexible in accommodating our requests for meeting.

Apart altogether from the excellent service I refer to above it was only when
we had decided to purchase a particular property that our lawyer proved what an invaluable asset she was to us. It is at this stage when one gets most nervous and in our case we had to contend with a lazy estate agent acting on behalf of the vendor, a vendor which comprised essentially four persons, a bank in a different province which held a mortgage on the property but yet refused to send a representative to the closing of the deal and some very sloppy paperwork prepared by the estate agent. During that last week I feared that the deal would fall through but thanks to the confident stewardship of Ms. Sviridovitch we closed the deal in early February, all the paperwork (notary matters, property registration, tax registration, payment of 'stamp duty', drawing up of wills etc.) has since been finalised and we are now the proud owners of a beautiful property on the Costa Tropical.

One final point I should add. Not being residents of Almunecar we had no idea
where we might buy electrical fittings, furniture and avail of the services of an electrician. Ms. Sviridovitch was extremely helpful in directing us to the appropriate persons and, in the case of the electrician, effectively saved us from nights without electricity and hot water when we last arrived in Almunecar - not a very pleasant prospect with two very young children.

I can highly recommend this firm of lawyers and Ms. Sviridovitch, in particular, and once aging thank you for directing me to this particular firm. I should add that a friend of mine recently acquired a property in Alicante and his experience with his lawyer was the complete opposite to mine. For this reason alone I am grateful for the efficient and professional service supplied to me by Fernandez Cuevas Abogados. I feel sure that, with the kind of quality service offered by this firm, it may confidently be relied on to provide excellent legal services to prospective clients

Kind regards

If anybody needs the service of a solicitor in the Costa Tropical - Granada area, just send us an email to euroresi@euroresidentes.com and we will forward it on to this highly recommended company of lawyers.

Related:
Spanish lawyers
Lawyers in Spain

Lowest property prices in Spain

Only ten cities left in Spain where one metre squared costs less than 1000 euros
House and flat prices are nearing their peak, however this peak is very high. There are only a few cities left where you can find a house or flat for less than 1000 euros per square metre and this is only in a few neighbourhoods. According to a report by House valuers (Tecnitasa) these cities are Cuenca, Murcia, Jaén, Melilla, Alicante, Badajoz, Las Palmas, Lugo, Zamora and Jerez de la Frontera. The report covered 61 Spanish cities in total.

However, the cheapest cities influence the figures significantly. In the area called La Paz, in Murcia, prices have risen from 650 to 830 euros per square metre in one year. In the cheapest areas in Jaen, prices have risen from 670 to 850 euros per square metre. Both rises are above 25% in just one year.

On the other hand the highest prices have remained static. In the Paseo de Gràcia in Barcelona a square metre costs 11,000 euros and 10,000 euros in la calle Serrano, in Madrid.

There are 10 cities where the price per square metre has risen above 6000 euros. Apart from Madrid and Barcelona. These cities are San Sebastian, Bilbao, Zaragoza, Marbella, Santander, Oviedo, Sevilla and Gerona amongst others.

However Estate agents have confirmed that the drop in property prices is becoming more and more generalized following the boom during the last few years. In fact two reports published yesterday state that property prices dropped in the first trimester of the year. Second hand houses and flats rose less than 1% in Madrid and Barcelona and prices dropped in many areas of both cities. One report by Expocasa goes a step further and states that property prices dropped during the first trimester in 66 of the 91 cities and towns with more than 25,000 inhabitants.

The cities which have experienced significant drops in prices are Coruña (a 6.8% drop), Valladolid (4.5%) and Cáceres (3.7%), according to Expocasa, while Idealista highlighted a drop in prices in San Fernando de Henares (3.5%) and Esplugues de Llobregat (5.2%).

María Antonia Trujillo, the Minister for Housing yesterday said that the housing sector is stabilizing and going back to figures that were normal 16 years ago. Speaking at a conference organized by one of Spain’s largest unions, UGT, in Cáceres, she said that the government’s objective was for the annual rise in house and flat prices to match the rate of inflation.