Munky’s point is when, if or at all will the time be right to invest in Spanish property. Munky is a market man so should understand well the premise of risk.
High risk requires big rewards. Right now investing in property anywhere for profit is a risk, however the risk is higher in Spain because of the factors correctly described by other posters here.
So if high risk is to be well rewarded it must be possible for an investor to buy property at substantially reduced wholesale prices. That is not currently possible.
Spanish banks are sitting on an enormous amount of none performing assets,(repossessed property) content in the knowledge the ECB will fund their shortfalls. Bankrupt developments sit rotting, growing weeds waiting for the upturn which may never come.
Investing now is not likely to produce returns for a minimum of five years. possibly more. That’s a long time for capital to rest, producing nothing.
Therefore what we have in Spain is stagnation and serious decline. It would be a brave if not foolhardy investor to risk capital in a market that is completely moribund if not completely dead as a parrot.
I have personally tried to persuade some banks to open up the flood gates, release their non performing assets and take the hit. Nothing doing. They are not convinced. They really believe the upturn is just round the corner so why pass on any benefits to the likes of I.
Moral hazard again. As long as the ECB tap continues, there is little incentive to get the market moving.
In any case demand is simply none existent. When you have massive supply and no demand, you have bankruptcy. It’s schoolboy economics. Unless you have a benefactor called The European Central Bank.
So to answer Munky’s question. In my opinion if you are an investor for profit don’t touch Spanish property with a long pole.
If you simply want a holiday home in the sun there are many other safer destinations without the high tax overheads of Spain. I regret to say it but I believe Spain has had it it’s day.
A perceptive and well-written post. Spain is indeed dead in the water for property speculators and developers. It’s a young democracy that innocently walked into shark infested waters when it assumed that democracy somehow equated with honesty.
The country has learned an expensive and horrible lesson over the past 10 to 20 years; hundreds of its own crooks are now facing trial in courts all over the place, especially on the CDS where 96 of them are attending Marbaella One court on a daily basis.
A sprinkling of foreign crooks are also gripping court’s rails, and they’re even trying to fetch Sean Connery back from his hide-out in Barbados.
The banks are not going to lend to speculators again, not for a long time, whether home grown or from foreign shores.
But things are slowly starting to right themselves. Ordinary people who want to buy a home in the sun to live in, or enjoy their holidays in, can easily find finance, although the checks are more stringent than before.