FT bleak assessment in report ‘Investing in Spain 2011’

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This topic contains 48 replies, has 11 voices, and was last updated by Profile photo of peterhun peterhun 5 years, 1 month ago.

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  • #56375
    Profile photo of Anonymous
    Anonymous
    Participant

    If you are interested in Spain, it’s well worth reading this special report by the FT, out today.
    http://www.ft.com/intl/reports/invest-spain-2011

    You have to register, but you get it for free if you haven’t used up your monthly article cuota.

    Here is the intro from an article about commercial property investors turning up in Spain looking for opportunities:

    Real estate: Investors and owners clash over wide ‘valuation gap’

    By Miles Johnson
    Those working in the Spanish real estate market have become used to hearing stories of heated encounters between exasperated foreign investors and incredulous owners.
    After years of booming rental prices and access to easy credit for developers, the sharp deterioration in the domestic economy has left billions of euros of soured loans on the balance sheets of the country’s banks.

    Sniffing an opportunity in a distressed market, commercial real estate brokers have reported a steady flow of so-called “smart money” arriving in Madrid, seeking to buy assets from lenders that often are struggling to raise much-needed cash.

    This “smart money”, however, is not always welcomed with open arms.

    A recent account of one meeting between a Spanish bank and a delegation from a foreign real estate investor saw the bank become so angered by the low price it was being offered that it called the delegation “carrion crows”.

    One of the unmoved investors replied: “You can call my capital what you want. I did not cause this crisis; you did, and you need our capital to get out of it.” The meeting ended with no deal being reached.

    It is this “valuation gap” that many argue is holding back a much-needed correction in commercial real estate prices. That will be crucial to allow prices to fall back to levels that will tempt brave overseas capital back into the Spanish market.

    Go to FT to read full article

  • #106058
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    Anonymous
    Participant

    What the Spanish do not accept that if they want to sell they have to accept an offer that is on the table and not their percieved valaution.

  • #105858
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    Anonymous
    Participant

    What the Spanish do not accept that if they want to sell they have to accept an offer that is on the table and not their percieved valaution.

  • #106060
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    but should accept the perceived valuation that someone else gives though?

  • #105860
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    but should accept the perceived valuation that someone else gives though?

  • #106062
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    Anonymous
    Participant

    Yes, Fuengi.

  • #105862
    Profile photo of Anonymous
    Anonymous
    Participant

    Yes, Fuengi.

  • #106065
    Profile photo of Anonymous
    Anonymous
    Participant

    Until that begins to happen, there will be many further aggressive stand-offs between investors and owners.

    I know this article is about commercial property but it could just as easily apply to the residential and holiday home market.

  • #105865
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    Anonymous
    Participant

    Until that begins to happen, there will be many further aggressive stand-offs between investors and owners.

    I know this article is about commercial property but it could just as easily apply to the residential and holiday home market.

  • #104311
    Profile photo of peterhun
    peterhun
    Participant

    They can wait.

    Its easier to eat from a dead body.

  • #104111
    Profile photo of peterhun
    peterhun
    Participant

    They can wait.

    Its easier to eat from a dead body.

  • #106066
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @shakeel wrote:

    Yes, Fuengi.

    why?

  • #105866
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @shakeel wrote:

    Yes, Fuengi.

    why?

  • #106069
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    Anonymous
    Participant

    Yes because they “should accept the perceived valuation that someone else gives” You either accept or you dont. One can not negotiate from a weak stance which is the position the SpanisBanks/Landlords are at this moment of the cycle.

  • #105869
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    Anonymous
    Participant

    Yes because they “should accept the perceived valuation that someone else gives” You either accept or you dont. One can not negotiate from a weak stance which is the position the SpanisBanks/Landlords are at this moment of the cycle.

  • #106070
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @shakeel wrote:

    Yes because they “should accept the perceived valuation that someone else gives” You either accept or you dont. One can not negotiate from a weak stance which is the position the SpanisBanks/Landlords are at this moment of the cycle.

    Then these sorts of investors should not be looking at Spain. You would think they would research the country and culture in greater detail before attempting to invest in it.

    Oh it also appears that in the first half of this year, investment in Spain is up 32.8% so far and if (always if) it continues foreign investment this year could reach back to 2008 levels.

  • #105870
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @shakeel wrote:

    Yes because they “should accept the perceived valuation that someone else gives” You either accept or you dont. One can not negotiate from a weak stance which is the position the SpanisBanks/Landlords are at this moment of the cycle.

    Then these sorts of investors should not be looking at Spain. You would think they would research the country and culture in greater detail before attempting to invest in it.

    Oh it also appears that in the first half of this year, investment in Spain is up 32.8% so far and if (always if) it continues foreign investment this year could reach back to 2008 levels.

  • #106076
    Profile photo of Chopera
    Chopera
    Participant

    By Miles Johnson

    A recent account of one meeting between a Spanish bank and a delegation from a foreign real estate investor saw the bank become so angered by the low price it was being offered that it called the delegation “carrion crows”.

    Obviously that wasn’t one of the Spanish banks that trapped (and are still trying to trap) thousands of Spaniards into taking out 50 year mortgages against over valued properties then. Must have been one of the other banks 🙄

  • #105876
    Profile photo of Chopera
    Chopera
    Participant

    By Miles Johnson

    A recent account of one meeting between a Spanish bank and a delegation from a foreign real estate investor saw the bank become so angered by the low price it was being offered that it called the delegation “carrion crows”.

    Obviously that wasn’t one of the Spanish banks that trapped (and are still trying to trap) thousands of Spaniards into taking out 50 year mortgages against over valued properties then. Must have been one of the other banks 🙄

  • #106090
    Profile photo of Anonymous
    Anonymous
    Participant

    Call for property price falls in Europe

    Real estate prices in peripheral eurozone countries need to fall to reflect the possibility of a break-up of the currency union, which could leave investors nursing losses of as much as 60 per cent, according to Natixis…..

    “There is something wrong with pricing relative risk in eurozone real estate markets when, say, Milan or Rome offices are being offered at low yields of 5 to 5.5 per cent or core Spanish retail at 5 per cent, in the middle of the sovereign debt crisis,” said Mahdi Mokrane at AEW Europe, which has €33bn ($45.5bn) under management.

  • #105890
    Profile photo of Anonymous
    Anonymous
    Participant

    Call for property price falls in Europe

    Real estate prices in peripheral eurozone countries need to fall to reflect the possibility of a break-up of the currency union, which could leave investors nursing losses of as much as 60 per cent, according to Natixis…..

    “There is something wrong with pricing relative risk in eurozone real estate markets when, say, Milan or Rome offices are being offered at low yields of 5 to 5.5 per cent or core Spanish retail at 5 per cent, in the middle of the sovereign debt crisis,” said Mahdi Mokrane at AEW Europe, which has €33bn ($45.5bn) under management.

  • #106099
    Profile photo of logan
    logan
    Participant

    I have been saying this for months on here and have taken flac for doing it from the subscribing agents.
    Residential and commercial property in Spain is hopelessly overvalued given the worsening times. My interest in this market has now grown weary. I doubt I shall ever return.
    The comments Mark made in his quote are similar to my own experience. I recognise the attitude of most property professionals and bankers in Spain.
    They inhabit a fantasy land believing relief is just around the corner and will say anything to convince the ill-informed.
    Well if that gets them out of bed in the morning fine but they really need to start living in the real world.
    They are like Nero fiddling whilst Rome burned.
    Carrion is better than nowt!

  • #105899
    Profile photo of logan
    logan
    Participant

    I have been saying this for months on here and have taken flac for doing it from the subscribing agents.
    Residential and commercial property in Spain is hopelessly overvalued given the worsening times. My interest in this market has now grown weary. I doubt I shall ever return.
    The comments Mark made in his quote are similar to my own experience. I recognise the attitude of most property professionals and bankers in Spain.
    They inhabit a fantasy land believing relief is just around the corner and will say anything to convince the ill-informed.
    Well if that gets them out of bed in the morning fine but they really need to start living in the real world.
    They are like Nero fiddling whilst Rome burned.
    Carrion is better than nowt!

  • #106101
    Profile photo of Anonymous
    Anonymous
    Participant

    Releif may be round the corner as I hear the Banks will be bailed out something they have waiting for and for this reason not reducing the prices.

  • #105901
    Profile photo of Anonymous
    Anonymous
    Participant

    Releif may be round the corner as I hear the Banks will be bailed out something they have waiting for and for this reason not reducing the prices.

  • #106102
    Profile photo of logan
    logan
    Participant

    The banks will receive financial aid simply to meet the coming new capital requirements and to keep them solvent. They will not be supporting the housing market or small business for a very long time to come.
    I agree that any pressing incentive to dispose of their property stock cheaply is removed when huge chunks of state aid and unlimited cheap cash from the ECB is flowing their way.
    In the EU normal free market economics don’t apply. It’s all rigged manipulation.

  • #105902
    Profile photo of logan
    logan
    Participant

    The banks will receive financial aid simply to meet the coming new capital requirements and to keep them solvent. They will not be supporting the housing market or small business for a very long time to come.
    I agree that any pressing incentive to dispose of their property stock cheaply is removed when huge chunks of state aid and unlimited cheap cash from the ECB is flowing their way.
    In the EU normal free market economics don’t apply. It’s all rigged manipulation.

  • #106103
    Profile photo of kgpoc
    kgpoc
    Participant

    (Been a while since I was last on – I hope everyone had a great summer, kept powder dry, didn’t do anything too foolish)

    At present I have been back and forth to my Boston office about 2 times a month since the beginning of summer, due to an ‘uptick’ in business. Every flight I’ve taken in the US has been completely full, in fact they are trying to bump passengers. Nearly all my flying is mid week too, which is normally all business travel. Also, on one trip a week ago, I decided to stay in Las Vegas for the weekend and I have to tell you – it too was full. I have traveled there in the past and rarely have I seen it that full – Hotels, ‘in hot spots’ everything! (even the helicopter operators that go to the grand canyon said they have not seen this much traffic in 3 years).

    Not sure it has much take on Spain, I still believe in the general concusses here about the health and short term property prospects in Spain. But in the US this year, don’t believe the economists, they are wrong!

  • #105903
    Profile photo of kgpoc
    kgpoc
    Participant

    (Been a while since I was last on – I hope everyone had a great summer, kept powder dry, didn’t do anything too foolish)

    At present I have been back and forth to my Boston office about 2 times a month since the beginning of summer, due to an ‘uptick’ in business. Every flight I’ve taken in the US has been completely full, in fact they are trying to bump passengers. Nearly all my flying is mid week too, which is normally all business travel. Also, on one trip a week ago, I decided to stay in Las Vegas for the weekend and I have to tell you – it too was full. I have traveled there in the past and rarely have I seen it that full – Hotels, ‘in hot spots’ everything! (even the helicopter operators that go to the grand canyon said they have not seen this much traffic in 3 years).

    Not sure it has much take on Spain, I still believe in the general concusses here about the health and short term property prospects in Spain. But in the US this year, don’t believe the economists, they are wrong!

  • #106104
    Profile photo of katy
    katy
    Spectator

    We couldn’t get the flights we wanted to the USA in December due to high bookings. The cruise ships out of the USA are alway fully booked (I think 12 million Americans cruised last year). Looking to book the caribbean after Xmas and some hotels are already full.

  • #105904
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    katy
    Spectator

    We couldn’t get the flights we wanted to the USA in December due to high bookings. The cruise ships out of the USA are alway fully booked (I think 12 million Americans cruised last year). Looking to book the caribbean after Xmas and some hotels are already full.

  • #106107
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    Anonymous
    Participant

    @katy wrote:

    We couldn’t get the flights we wanted to the USA in December due to high bookings. The cruise ships out of the USA are alway fully booked (I think 12 million Americans cruised last year). Looking to book the caribbean after Xmas and some hotels are already full.

    12 million Americans are getting richer and 300 million Americans are getting poorer.

    The ranks of America’s poor reached 1 in 6 people last year, the number of uninsured edged up to 49.9 million, the biggest in more than two decades.The official poverty level is an annual income of $22,314 for a family of four i.e. about £15000/year, I do not think many families in UK could survive on £15000/year for 4 people.

    December high bookings and cruise ships out of the USA fully booked do not mean anything.

  • #105907
    Profile photo of Anonymous
    Anonymous
    Participant

    @katy wrote:

    We couldn’t get the flights we wanted to the USA in December due to high bookings. The cruise ships out of the USA are alway fully booked (I think 12 million Americans cruised last year). Looking to book the caribbean after Xmas and some hotels are already full.

    12 million Americans are getting richer and 300 million Americans are getting poorer.

    The ranks of America’s poor reached 1 in 6 people last year, the number of uninsured edged up to 49.9 million, the biggest in more than two decades.The official poverty level is an annual income of $22,314 for a family of four i.e. about £15000/year, I do not think many families in UK could survive on £15000/year for 4 people.

    December high bookings and cruise ships out of the USA fully booked do not mean anything.

  • #106109
    Profile photo of logan
    logan
    Participant

    As in every recession the poorest and the unskilled take the hit first. You cannot judge how an economy is doing by fully booked hotels, cruise ships or aircraft. That simply means a section of society has yet to be affected.
    That’s why we have number crunchers and index’s which give a truer picture of market economies performance.
    In Spain right now you can see beaches packed with holiday folks, expensive cars in the hotel car parks and restaurants full up. and you could be forgiven for thinking the country is on the up.
    Yet study the numbers as all investors do and you will run for cover. Perhaps we market people have got it all wrong after all! 🙂
    I don’t think so.

  • #105909
    Profile photo of logan
    logan
    Participant

    As in every recession the poorest and the unskilled take the hit first. You cannot judge how an economy is doing by fully booked hotels, cruise ships or aircraft. That simply means a section of society has yet to be affected.
    That’s why we have number crunchers and index’s which give a truer picture of market economies performance.
    In Spain right now you can see beaches packed with holiday folks, expensive cars in the hotel car parks and restaurants full up. and you could be forgiven for thinking the country is on the up.
    Yet study the numbers as all investors do and you will run for cover. Perhaps we market people have got it all wrong after all! 🙂
    I don’t think so.

  • #106110
    Profile photo of Anonymous
    Anonymous
    Participant

    @flosmichael wrote:

    @katy wrote:
    We couldn’t get the flights we wanted to the USA in December due to high bookings. The cruise ships out of the USA are alway fully booked (I think 12 million Americans cruised last year). Looking to book the caribbean after Xmas and some hotels are already full.

    12 million Americans are getting richer and 300 million Americans are getting poorer.

    The ranks of America’s poor reached 1 in 6 people last year, the number of uninsured edged up to 49.9 million, the biggest in more than two decades.The official poverty level is an annual income of $22,314 for a family of four i.e. about £15000/year, I do not think many families in UK could survive on £15000/year for 4 people.

    December high bookings and cruise ships out of the USA fully booked do not mean anything.

    I think judging from Katys posts she likes to fly her flag while at other times having a laugh at other posters. While it is good to hear positive news about bookings being up and what holidays people are going – I think reality for some is very different. This forum is supposed to be about Spain and not the US economy!

    Angela

  • #105910
    Profile photo of Anonymous
    Anonymous
    Participant

    @flosmichael wrote:

    @katy wrote:
    We couldn’t get the flights we wanted to the USA in December due to high bookings. The cruise ships out of the USA are alway fully booked (I think 12 million Americans cruised last year). Looking to book the caribbean after Xmas and some hotels are already full.

    12 million Americans are getting richer and 300 million Americans are getting poorer.

    The ranks of America’s poor reached 1 in 6 people last year, the number of uninsured edged up to 49.9 million, the biggest in more than two decades.The official poverty level is an annual income of $22,314 for a family of four i.e. about £15000/year, I do not think many families in UK could survive on £15000/year for 4 people.

    December high bookings and cruise ships out of the USA fully booked do not mean anything.

    I think judging from Katys posts she likes to fly her flag while at other times having a laugh at other posters. While it is good to hear positive news about bookings being up and what holidays people are going – I think reality for some is very different. This forum is supposed to be about Spain and not the US economy!

    Angela

  • #106113
    Profile photo of katy
    katy
    Spectator

    Well I was only responding to KGPC s post, not as if the forums is soo busy that it can’t go off topic. 🙄 OK. then Spain it is 😆 I was there for a few days in July, signs of recession visible…empty chiringuitos and lots of empty restaurants. Plenty of people on the beach with Lidl and Mankydona carrier bags.

    BTW don’t think it’s been mentioned…Fitch downgraded more Spanish banks on Tuesday..including the biggest ones Santander and BBVA.

    Adios

  • #105913
    Profile photo of katy
    katy
    Spectator

    Well I was only responding to KGPC s post, not as if the forums is soo busy that it can’t go off topic. 🙄 OK. then Spain it is 😆 I was there for a few days in July, signs of recession visible…empty chiringuitos and lots of empty restaurants. Plenty of people on the beach with Lidl and Mankydona carrier bags.

    BTW don’t think it’s been mentioned…Fitch downgraded more Spanish banks on Tuesday..including the biggest ones Santander and BBVA.

    Adios

  • #106118
    Profile photo of kgpoc
    kgpoc
    Participant

    WARNING – NOTHING TO DO WITH SPANISH PROPERTY

    (Angela – Sorry about the US bit! I put it in due to the fact that many on here keep an eye on Investments/markets and right now the western Stock Markets are so highly correlated – if the US goes up, it helps the European Markets and there is a trickle down effect.)

    As for the fact flights/hotels in the US are full in Aug, Sep, Oct is very telling of the US economy. It is sick, but not as sick as indexes/economists are saying. I put this in as a warning – there is no US recession, or as many are calling greater than 50% risk of recession, I do not see it! Business are slowly starting to spend on technology and other areas to try and increase sales, where as before they were only looking to contain or cut costs.

    Either way with this call, I will be the pig – skewered on the spit or wallowing in the mud! 😀

  • #105918
    Profile photo of kgpoc
    kgpoc
    Participant

    WARNING – NOTHING TO DO WITH SPANISH PROPERTY

    (Angela – Sorry about the US bit! I put it in due to the fact that many on here keep an eye on Investments/markets and right now the western Stock Markets are so highly correlated – if the US goes up, it helps the European Markets and there is a trickle down effect.)

    As for the fact flights/hotels in the US are full in Aug, Sep, Oct is very telling of the US economy. It is sick, but not as sick as indexes/economists are saying. I put this in as a warning – there is no US recession, or as many are calling greater than 50% risk of recession, I do not see it! Business are slowly starting to spend on technology and other areas to try and increase sales, where as before they were only looking to contain or cut costs.

    Either way with this call, I will be the pig – skewered on the spit or wallowing in the mud! 😀

  • #106119
    Profile photo of Anonymous
    Anonymous
    Participant

    @kgpoc wrote:

    WARNING – NOTHING TO DO WITH SPANISH PROPERTY

    (Angela – Sorry about the US bit! I put it in due to the fact that many on here keep an eye on Investments/markets and right now the western Stock Markets are so highly correlated – if the US goes up, it helps the European Markets and there is a trickle down effect.):D

    Hi kgpoc,

    It was more to do with Kathy – but I didn’t see her apology nor would I expect it – just look at her last post “Plenty of people on the beach with Lidl and Mankydona carrier bags” – it says it all. Katy I suppose you only have House of Fraser or Harrods bags!!! 😆

    Opps sorry for going off topic!!!

  • #105919
    Profile photo of Anonymous
    Anonymous
    Participant

    @kgpoc wrote:

    WARNING – NOTHING TO DO WITH SPANISH PROPERTY

    (Angela – Sorry about the US bit! I put it in due to the fact that many on here keep an eye on Investments/markets and right now the western Stock Markets are so highly correlated – if the US goes up, it helps the European Markets and there is a trickle down effect.):D

    Hi kgpoc,

    It was more to do with Kathy – but I didn’t see her apology nor would I expect it – just look at her last post “Plenty of people on the beach with Lidl and Mankydona carrier bags” – it says it all. Katy I suppose you only have House of Fraser or Harrods bags!!! 😆

    Opps sorry for going off topic!!!

  • #106120
    Profile photo of katy
    katy
    Spectator

    Nah, if I am on the beach I eat in a chiringuito, no packed lunches for me :mrgreen:

  • #105920
    Profile photo of katy
    katy
    Spectator

    Nah, if I am on the beach I eat in a chiringuito, no packed lunches for me :mrgreen:

  • #106123
    Profile photo of peterhun
    peterhun
    Participant

    “You cannot judge how an economy is doing by fully booked hotels, cruise ships or aircraft.”

    Indeed. The reason for full flights is the airlines have retired as much capacity as they can due to the oil price and economic situation. American Airlines is having it particularly bad because of the number of MD-80’s (very inefficient) they still have.

    Major airlines reduce flights, the price of flying remains high

    Full flights= bad economic sign

  • #105923
    Profile photo of peterhun
    peterhun
    Participant

    “You cannot judge how an economy is doing by fully booked hotels, cruise ships or aircraft.”

    Indeed. The reason for full flights is the airlines have retired as much capacity as they can due to the oil price and economic situation. American Airlines is having it particularly bad because of the number of MD-80’s (very inefficient) they still have.

    Major airlines reduce flights, the price of flying remains high

    Full flights= bad economic sign

  • #106249
    Profile photo of kgpoc
    kgpoc
    Participant

    Please can I say, “I told you so” now?

    Again, those very bright, very over paid economists got it wrong (over a US recession) and scared a lot of people out of some very good trades.

  • #106261
    Profile photo of peterhun
    peterhun
    Participant

    The UK and probably several countries in Europe are almost certainly in negative growth at present. Nothing to get excited about.

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