Spanish Property Insight › Forums › Spanish Property Forums › Spanish Real Estate Chatter › So says Deutsche Bank
- This topic has 14 replies, 5 voices, and was last updated 15 years, 7 months ago by Paul.
November 1, 2007 at 9:38 am #53442
They said it…not me!
The recent reports of a cooling-off in the housing market have caused certain elements in the media to claim the sky is falling, but an extensive study by the Deutsche Bank has concluded that the Spanish economic miracle is sustainable.
The report comes from the gleaming heartland of German finance – namely the Deutsche Bank research office in Frankfurt (known as Bankfurt in the European business world). The study hails the economic miracle that has transformed Spain from a poor and chronically under-performing country to the ninth largest economy in the world.
There are four main reasons for Spain’s success:
Rising labour input Labour input has been surging, with plummeting unemployment rates, increased immigration and a high participation rate. As a result, the government has plenty of tax money to fund new initiatives and consumers themselves have more money to spend. Unemployment in Spain now runs at 8 percent – less than half the figure of 13 years ago. Women and older people are increasingly entering the workforce. The report sees immigration as vital to Spain’s economic success and forecasts that over a quarter of a million people will arrive in the country every year between 2010 and 2020.
Improved human capital
Spain’s workforce is highly educated, with 38 percent of young Spaniards completing further education. This is one of the highest rates in Europe, easily outstripping Italy and Germany. The key is public funding, and with increased funds available to the government, the report suggests that things can only get better. The next challenge is to increase the quality of lifelong education, with evening classes and training programmes.
More openness and deregulation
Spain was a relatively closed economy before joining the EU in the early 1980s. Since then it has become increasingly open to Europe; has taken advantage of historical links with latin America and is dealing more and more with Asia. Spain has experienced more direct foreign investment than any other country apart from France in recent years, and strong Spanish companies have also been active in foreign countries. However, the report points out that Spanish bureaucracy, especially in regard to setting up a business and tax, needs to be addressed, but recognises that the government are doing so.
Spain has historically lacked innovative potential – whle other countries can reel off lists of life-changing inventions, Spain is stuck with the mop and table football. The roots of this problem date right back to the banning if books in the 16th century to the many years of mediocrity under Franco, but the result is that Spain has a very low rate of patent applications and weak entrepreneurial skills. The report forecasts that this will change, with Spain enjoying the youngest scientists in Europe, and more graduates in science and engineering than anyone in Europe and the USA.
The report concludes that the Spanish housing boom was a symptom of past economic success rather than a pointer to the future and concedes that the tailwind of construction may ease off. But in a country with such a promising future, it would also seem that fears of a crash are unfounded.
Extract taken from Lanzarote Gazette.
November 1, 2007 at 11:21 am #76004
I wrote about his report in my news bulletin last month. You can read the report in english (pdf) with the following link:
November 1, 2007 at 2:11 pm #76005
So says the report in ‘the Lanzarotte Gazette’ ??????
‘fears of a crash are unfounded’ ?????? Has he checked the Costa del Sol and Costa Blanca lately?
Funny that most independent reports say the opposite, talk about ‘bubbles bursting’, crashes, oversupply of apartments (650,000 p.annum) not enough buyers, US, (and now UK) housing woes affecting most markets inc. Spain’s, 30% overvalued Costa properties, loads of illegal builds, continuing scams, Land Grab still operating etc etc
There is a huge vested interest in Spain talking their market up, their economy depends to a large extent on their huge property taxes.
Time will tell I suppose!
November 1, 2007 at 2:34 pm #76006
That’s why I called it So Says Deutsche Bank….the Gazette just said what DB said….maybe they did add the bit about the crash fears being unfounded..?!
Have a look at the link Mark posted….Deutsche Bank’s report. It’s interesting stuff…
And anyway…is a “crash” such a bad thing after all??
November 1, 2007 at 2:42 pm #76007
Stewlanz, I wasn’t having a pop at you, only the article, and, maybe Deutsche Bank also has a vested interest, possibly linked to sub-prime exposure in the US and even Spain etc. They might get left holding lots of defaulting mortgages.
It was funny that it appeared in the Lanzarote Gazette, I don’t think the Canaries are suffering quite as bad as the Naughty Costas where most people seem to think it will get a lot worse before it even starts to get better (when the crooked agents and developers have gone too).
November 1, 2007 at 2:51 pm #76009katyBlocked
The report does not seem to take into account the enormous amount of money that was fed into Spain from Brussels, this will soon stop.
November 1, 2007 at 3:00 pm #76010
…..and what did I see on Sky News this morning?
UK house prices continuing to rise.
Over 1% last month alone.
Huge shortages of homes and only going to get worse.
One day a crash….next day a shortage?
November 1, 2007 at 3:06 pm #76011
No probs Paul – I didn’t think as much anyway!
Granted, Canaries are a world apart – but we are affected none the less by the current climate.
We have our own bent Mayors….one of them has just had 76….yes 76 Cabildo charges successfully brought against him because he was/is issuing building licences without consulting them.
Fair enough I suppose if the charges and subsequent cancelling of building permits happen before any bricks are laid….but that is rarely the case, as many on here are only too aware of.
Stupidly enough, 3 big 4* hotels have recently had their building licences revoked. The fact that they have been open for years makes it a mockery.
When one had a High Court demolition order, the local government said they would compensate the owners 12 million euros.
This is for a huge (and one must admit) very nice hotel with hundreds of beds employing hundreds of people and in all the major tour operators brochures.
Probably end up with nothing changing at all….re the 2 hotels on the beach in Corralejo in Fuerteventura.
November 1, 2007 at 3:20 pm #76012
Stewlanz, you say “We have our own bent Mayors” and “he was/is issuing building licences without consulting them. ” but this doesn’t seem to have affected the property prices yet, or has it?
I must admit, there does seem a record number of properties for sale on Lanzarote.
November 1, 2007 at 3:36 pm #76013
That’s a very difficult question to answer!
We are only a small island, but differences in property prices from one street to the next can be huge.
You can find villas for 750k on one side of the road and 1 bed apts on the other in many areas.
There are certainly a record number of 1 bed apts on the market and that in itself is a totally separate subject as to the reasons why.
However, in a nutshell, 1 and 2 beds are holding their ground and good 1 beds on good complexes are even increasing in prices.
Many villas of 400k plus have reduced their prices and continue to do so.
For me, this is a welcome correction in the marketplace and I can only see it as a good thing.
Most of the owners of big villas are not desperate to sell and have seen huge increases of the past few years and have simply been putting their properties up at X amount to see if they sell or not. This has been bad for the market in many ways.
Properties away from the main tourist resorts have also seen huge rises in the past few years and those that have been up for sale at silly prices are reducing too.
Even so, some properties which were bought for 230,000 euros 4 years ago are now on the market at over 400,000 euros. So I think a natural stagnation is well in order!
To briefly return to 1 beds – I know of some for sale for 73,000 euros whereas 1k up the road (the same road) there are others for 165k. The 1 bed market is a market within itself and never ceases to amaze me.
The main concern here for the past few years has been tourism and the need to open up the island to cheaper flight providers.
This is now happening with Easyjet, Jet2.com, Ryanair etc all running routes here from today from both the UK and Ireland.
Of course, this will bring more people who are on the lookout for 1 beds and so will sustain that market.
As in any property correction phase, if you are in the market for a bargain, there are plenty to be had, especially higher up the ladder. There will always be winners and losers….it’s just that some losers aren’t losers at all, but winners who are not winning quite as much as they hoped to!
Interesting times for Lanzarote all round – real estate, tourism, new flight routes, more Spanish/French/Italian tourists appearing all the time.
There are many areas of our sleepy island that need a kick and it’s starting to happen.
Anyway, it’s a Fiesta today so I must stop! Still trying to scrub off the fake blood from last nights antics!
November 1, 2007 at 3:39 pm #76014katyBlocked
Thus speaks another agent 🙄
November 1, 2007 at 4:04 pm #76015
..and so ASKS another agent.
What does that mean, Katy?
November 1, 2007 at 4:09 pm #76016
“Properties away from the main tourist resorts have also seen huge rises in the past few years” So the same as Spain, UK and dare I say it, USA then.
Now USA seems to be leading the trend with reduced prices, followed by Spaim and UK. Suppose this is bound to have an affect on the numbers looking for holiday homes, or as many like to believe, “investments”, in Lanzarote and Spain.
Bargains to be had. Keep them coming!!
November 2, 2007 at 5:07 pm #76022
I didn’t realize the Canaries were having similar problems Stewlanz, not so according to Tenerife Property Shop who say it’s buoyant, but then they market a bit like the larger naughty agents on the Costas. Their prices on Tenerife seem higher than I thought, probably including their huge commissions.
Has Spain cornered the market for bent Mayors and Town Halls?
November 6, 2007 at 2:55 pm #76038
Continuing the theory of which Banks are overexposed to sub-primes/defaulting mortgages including Spain, I saw on TV yesterday that apparently British Banks were less exposed to this problem, but the German and Swiss Banks were heavily exposed which might be the reason that Deutsche Bank was trying to put out positive news on Spanish property, protecting their own dodgy position maybe!
I’m also told that HSBC is the safest having a larger credit than debit lending book than any other UK Bank, or even the US Banks.
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