What is the Reality of the Spanish Property Market? Are Banks the Best Source For Cheap Deals?

Spanish house price falls seem to range between: 50% since the 2007 peak, to the official statistics of -7%. Both extremes cannot be correct. So which is the correct figure? Latest figures from the Ministry for Housing show National average prices have fallen 8% over 12 months, from EUR1,780 m2 to EUR1,634.7 m2 today (September ’09 vs ’08).

This seems a modest property price decrease, given latest quarterly house price data from Knight Frank, which shows the USA officially declined -15.4% and the UK -11.7%, Bulgaria -21.9%. Many expected to see double digit falls and the International Monetary Fund (IMF) forecasts bigger falls than is being reported. Agents on the ground believe prices in some instances have declined up to 50%. That isn’t to say that is the case with all property, it may be in pockets and where properties have been priced unrealistically, to begin with.

So why is there this discrepancy in figures? Well official figures are not always that comprehensive and because of the way the Spanish conveyancing system has worked in the past, not all transactions may have been captured at the most accurate price. So what is the truth about the price dynamics? It lies somewhere in between officialdom and anecdote, as ever. Coastal properties have suffered more, based on anecdotal evidence, as this is where a lot of housing stock is, whereas inland properties appear to have suffered less as a generalisation.

So what is the best source of cheap deals?

Are Banks the best source of cheap property?

Spanish lenders acquired at least EUR20 billion ($29 billion) of property in the past 18 months, according to data compiled by analysts at Zurich-based Credit Suisse Group AG.

Some buyers assume that the surest way to secure a cheap Spanish property is to access repossessed properties direct from the bank. However, there are downsides to this approach. Repossession in Spain is slow – sometimes more than 12 months. So properties promoted today as ‘repossessed’, may have been around and available for 18 months or so. So it may have been the case that the “bargain” property had already failed to find a buyer for at least a year, maybe longer.

The second drawback is intrinsically related to this point. Due to the length of time it takes to repossess a property, banks will want to pass this cost of effort on. So prices could be inflated to take account of the repossession process. What about developers, sellers and agents as a competitive source for discounted property?

Many bargain properties are still available direct from sellers, developers and agents. It does not cost more to buy through an agent, than it does to go directly to a developer. Pricing will already be based on selling through multiple channels. Agents are a valuable source of advice and guidance through some of these nuances. Many developers and sellers are aware of the market dynamics and have already adjusted prices accordingly. Just because you hear the word repossessions, does not automatically mean there are cheaper properties available.

So what is the outlook for Spain?

Buying into Spain now, while prices are keen, is surely attractive for many who may have found Spanish prices unaffordable in the past. This assumes finance is available to those wishing to do so. Whilst the economic outlook is still uncertain, it remains a favourite among buyers because of its climate, lifestyle and beauty. It is a great time to be getting into the market, if a medium to long term outlook, is taken.

And whilst property price declines have been more accentuated on the coast, inland prices have held up. So if you are feeling uncertain about the prospects and not sure whether more price falls are likely, an option would be to look inland, where prices and values have held up more and are likely to be less volatile in the future.

Sources: Bloomberg, OPP, Economist, RR de Acuna, IMF, Investors Chronicle, Credit Suisse, SPI, Knight Frank

Overseas Real Estate Opportunities Must Include Bulgaria Property Investment

Real estate investing may not be the first thing that comes to mind when potential investors think of the best opportunities, particularly in the wake of the recent housing market collapse, but now is one of the best times to invest in a range of properties from industrial and commercial to residential. In addition, the recent troubling economic times have also forced many investors and corporations alike to find new ways to maintain their investments in a changing market, leading to some very innovative and effective strategies.

One of the most overlooked aspects of the real estate market is the potential of overseas property investment, and there are many clever individuals that have used the fact that a crisis in one market does not necessarily mean the same for another to make money in it. The ability brought about by the Internet and its associated technologies for users to monitor a variety of markets around the world has led to significant profits regardless of the state of any one financial market.

Finding, Buying, and Selling Overseas Properties

As with any investment venture, those new to the arena are strongly urged to seek the guidance of a professional, as there are inherent risks associated with all investments. Depending on one’s goals, an overseas property investment can be quite a stable investment for the long term or one in which quick profits can be made. During times of a down-turning economy, there are often many substantial deals on properties available, but knowing which ones will recover in time to ensure a profit is another story, and these are the aspects that working with an agent experienced in that particular area can help with tremendously.

The process of locating individual investment properties is typically only a matter of some research online, and by combining search criteria like interest rates, types of structures, and even the value of the local currency, investors can quickly locate those with the most potential. Finding and securing opportunities from a Bulgaria property investment to houses or business structures in one’s own neighborhood can be accomplished completely online and even managing and re-selling the properties can be finished without ever actually setting foot on the property itself.

One of the Latest Trends Started as a Last-Ditch Effort…

A surprising outcome of the recent economic decline in the U.S. is the rise in lease-to-own options for businesses and individuals all over the country, and the trend is seeing great promise in other parts of the world as well. The strategy was employed by several property owners that could not get a decent price for their structure, but in lieu of taking a bulk loss, have opted to lease the property out over time with the agreement of purchase sometime in the future.

This strategy, along with the many incentives, discounts, and tax breaks now available have made it possible for many to get started in real estate investing as well as protect their current investments. Leasing-to-own options are beneficial to both parties and very popular in these tougher economic times, and now is one of the best times secure the best deals on commercial and residential properties all over the world to take advantage of this strategy while it is booming.

Is Bulgaria the Best Property Investment in Europe?

A couple of decades ago, French property was the top choice for people investing their money; old farmhouses, rustic mountain chalets and slick inner-city pads could be picked up for a reasonable price and the market was growing. As the prices rose, the opportunities for buying low and selling high became fewer and further between, and investors began looking to Spain where the boom in package holidays to the Mediterranean coast meant apartments were being built everywhere and rental potential was high.

Now the Spanish property market has also matured and investors have had to look further afield to find places where money could be made. One of the biggest influencing factors to have occurred over the last decade is the expansion of the EU. This has meant that many countries that previously were a minefield of legal barriers and red tape are now much more open to foreign investors.

The fact that several of the new EU states have already, or soon will be adopting the Euro, has also facilitated property investment, as well as sending out a signal to investors saying that these countries are stable places to invest. The eastern expansion has mean that many exciting opportunities for investors have appeared, and there has been a lot of interest in Slovakia, Poland and the Czech Republic; but by far the most attractive country for property buyers has been Bulgaria.

Perhaps one of the greatest attractions for property investors in Bulgaria is the huge choice of real estate to invest in. Those looking for an inner city purchase will find Bulgaria’s vibrant capital Sofia, an ideal place to invest, but it has been the ski resorts and beach destinations that have been the biggest draw.

Bansko is Bulgaria’s leading ski resort, with the longest slopes in the country and the best snowfall records. The development of state-of-the-art lift systems, combined with a rustic old town with meandering cobbled streets have raised Bansko’s profile and put it on the international ski map, making it a very popular choice with investors and meaning most new developments sell out long before completion. Beach-side developments along the Black Sea coast are in similar demand, due to the golden sands, clean and safe water and excellent value property.

However, nothing lasts forever and like France, Spain and countless other property hotspots, Bulgaria’s time will come and go; but for now, this Balkan country is being touted as the best property investment in Europe, so get in there while you still can.