Costa del Despair? Really?

It looks like the media, in this case the mail are trying to label the Costa del Sol with a new nickname. Previously known as the Costa del Crime, followed by the Costa del Golf, now the Mail is trying for the Costa del Despair. Quite catchy but not as impressive at the Costa da Morte, Coast of death (official name) that is found in the north of Spain.

The article which can be found here mail online makes a few points that outside of sensationalism hold little validity, a few of which I intend to comment on.

The author of the article or one of his researchers was in contact with me when they came down on ‘fact finding’ tour asking if we knew of any ‘expats’ that were desperate to go back to the UK, which unfortunately for the reporters, we could not help them. And from the article they did not have much luck finding anything of particular interest.

“In the UK we face spiralling national debt, plunging house prices, sky-rocketing unemployment and the return of 50 per cent income tax – but for the British expats on the Costas the situation is even worse.
The Spanish economy is predicted to shrink by 3 per cent this year and one in five people is expected to be out of work – twice the EU average. Home repossessions have doubled, bankruptcies soared, and the bottom is fast falling out of the tourism industry.”

I do not think anyone can argue that the situation is harder on average for everyone, everywhere, but as far as I understand it, recently Alistair Darling has stated that the economy of the UK will contract by 3.6%.
In regards to unemployment, it has always been traditionally high in Spain; with even during its most robust year of growth it was at 8%, nearly twice the EU average. Of course there are more bankruptcies and repossessions that is the state of the economy. And tourism has only decreased by 23%, not bad considering a crisis.

“The broad reasons are well-documented. Barely six months ago, £1 bought about €1.4, but with the exchange rate now at virtual parity, the private and state pensions on which many expats depend – and which are paid in sterling – have lost almost one-third of their value.”

Unfortunately this is true, but even at a one to one exchange, 1€ goes substantially further in Spain than a £1 does in the UK. So those on sterling pensions, although maybe not able to spend as they did before they can still live. As with many of us, you just need to cut back where you can. And I am sorry to say, you cannot always expect the exchange rate to be in your favour.

“At the same time, interest rates on their investments have fallen from around 6.5 to 1.5 per cent. To compound their problems, many are tied into long-term Spanish mortgages at much higher fixed rates, so they are not benefiting from falling interest rates.”

I would be interested to see where this information came from, as a vast majority of mortgages are variable rates here in Spain. In most cases Euribor + anything from 0.5 to 2%. Yes mortgage rates might not be as low now as they are in the UK, that is due to the rates sent in Brussels and the resilience of Spanish banks, which except for one savings banks in central Spain, have not needed to rely on the central government for survival.

“There are now an estimated one million surplus homes on the conspicuously over-concreted costas, many of them purpose-built for the British market, but estate agents are closing down all along the coast.”

The figures in regards to ‘surplus’ homes are not clearly documented. Although currently there are estimated 55,000 surplus homes in the province of Malaga where the Costa del Sol is located. According to most knowledgeable people figures range from 700,000 to 1 million surplus properties in all of Spain.

“And as the only buyers are speculators making audaciously low offers (50 per cent of the asking price is not untypical), the villas and apartments expats bought for optimum prices during the recent property boom – in the belief their value could only go up – have become virtually un-sellable.”

Crap (technical term). Yes people are making low offers, of course. But for properties that are priced correctly for the current market, are selling with only small discounts being made. At the end of the day a property is only worth what someone is willing to offer.

“The picture grows more depressing still when you drive 40 minutes along the coast to the cheap-and-cheerful British enclave of Fuengirola, with its brash, football-themed bars, and cafes serving English pub grub
Strolling along ‘Fish Alley’, a gourmet thoroughfare for British stodge and lager guzzlers, it soon became clear that the glutinous gravy-train has well and truly hit the buffers.”

Amazingly there are quite a few new bars and restaurants opening along fish alley and the surrounding areas. This is a street that consists of only bars and restaurants. Those that appeal only to one segment of the market, and the low end of said market are bound to have difficulties in this climate. On the other hand those that appeal to a wider demographic are, if not thriving, at least surviving.

“Like most of his rivals, he is attempting to lure customers with cut-price meals. ‘This is the REAL deal,’ reads his latest sign. ‘Fresh Icelandic fish, fresh chips and mushy peas – only €7.50.’”

7,50€! Sorry this is vastly overpriced for one dish. Similar dishes can be found for 5€ and 3 course meals for 8€ or so.

“’Business was fantastic at first,’ said Mr Hill mournfully. ‘We only needed to open from 6pm till 10.30pm, and we would get 90 customers. Now we open for 13 hours a day, and we’re lucky if we get 30.”

Again I am  sorry. Anyone with a catering background knows that long opening hours are the norm. Also when located in an area with a lot of competition, you need to differentiate from your competition.

This is no different for anyone looking at selling a product, service or property. You need to be competitive.  If the only offers you are getting are low, maybe your prices are too high?

Andrew Belles

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One Response to “Costa del Despair? Really?”

  1. daniel says:

    well said!!

    Before throwing more fuel to the fire maybe these reporters will do a bit more research in the future. Why not for example write an article on cost of living here in Spain compared to the UK, a reason why a hell of a lot of people are here in the first place not to mention the weather. But i guess there no news like bad news even if your scrapping the barrell trying to find it.

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