The European Commission today approved the holding of five Spanish train corridors included in the design of the trans-European network should be operational by 2030. The Mediterranean Corridor, which originally included the province of Malaga, now appears to go from Almeria and Sevilla across the north of Andalucia to Antequera / Bobadilla.

The Mediterranean corridor, with an investment of 19,424 million euros, and is constituted as a multi-use corridor, both road and rail, which connect the French border to the main transport nodes in four regions of Spain along the Mediterranean Coast.

This set of infrastructure projects will connect the French border with Algeciras, via Barcelona, Valencia, Cartagena and Almeria, and will have a transverse axis between Granada and Antequera, where it forks to finish in Seville. All major ports along the mediterrean will connect to the new network (Barcelona, Tarragona, Castellón, Sagunto, Valencia, Alicante, Cartagena, Almeria, Malaga and Algeciras, etc.) and will feature the development of the Guadalquivir river corridor to the port of Sevilla

Along the Mediterranean Corridor, the European Commission has also approved the Central Corridor, the Atlantic Cantabrian-Mediterranean Corridor and the Atlantic Mediterranean Corridor. With these investments, Spain will get to perform the necessary infrastructure works to achieve a comprehensive network for both passenger and freight transport.

In all, Spain will invest 49,800 million euros between 2014-2020, in carrying out the works.

Development sources have indicated that this investment will take place under the state budget will mean an average cost of 7,000 million euros annually, which must be added between 10 and 20% of 31,700 million euros that contribute to a Europe-wide European Funds.

Spanish Article: Diario Sur

Moreover, these investments exceeded 1000 million between April and June for the second consecutive quarter. Something not seen since 2008, before the final collapse of these purchases. In the second quarter, an increase over the first purchases was 16.1%.

Foreign investment in Spanish property had been falling steadily since 2003, when it reached 7.072 million euros, 2004 saw this decrease to 6650 million, 5.495 million in 2005 and, finally, 4.716 million in 2006.

However, this trend was reversed in 2007, when 5.341 million euros was invested, a 13.3% more than 2006.

2008 saw a similar figure of 5.331 million invested in Spain.

Then in 2009, the economic crisis saw investment decrease to 3,651 million euros.

If the trend for this continues, we will see foreign investment in Spanish property rise to the 2008 figure. A good portent for owners of properties, whether residential or commercial in the more popular locations.

Regards
Andrew Bellés

There are plenty of variations on the theme. But the general argument goes like this: “We live on a small island, our population is growing, and there just aren’t enough houses to go around.”

And the rebound seen in the market last year simply seems to confirm this view. There aren’t enough houses – so you can’t go wrong with bricks and mortar.

The bulls have got it right in one sense. House prices are indeed all about supply and demand. But it’s supply and demand for credit, not houses.

If you want the proof, just look at Spain…

What’s propping up Spanish house prices?

Spain has had a horrendous recession. It’s on the infamous “PIIGS” list of threatened peripheral eurozone countries. It has unemployment of around 20%. And there are myriad horror stories of Britons who bought property in the country only to find that their homes were subject to legal disputes, or simply that their pensions couldn’t sustain them when the pound slumped against the euro.

And yet, just as we’ve seen in the UK, the market seems to have managed to take the strain. In the second quarter of 2010, Spanish property rose by nearly 25% to just under 150,000, according to the Housing Ministry. The rise was driven mainly by growth in “second-hand” home sales – up nearly 50% on the quarter, compared to just a 4.6% rise for new home sales.

That may sound impressive. However, sales are nowhere near their bubble-era peak, when figures would have been more like double that. Yet, the toll on house prices hasn’t reflected this. As Fiona Maharg-Bravo puts it on Breakingviews.com, “the Spanish housing bubble isn’t in a hurry to deflate. Prices have held up and are now just 12% off their 2008 peak.” That’s comparable to Britain – if you use Nationwide figures, we’re around 10% off the 2007 peak price for the average British home (and closer to 16% if you look at Halifax).

Yet there are estimated to be about a million empty new-build homes in Spain. Says the FT, “most experts say it could take another three to four years to absorb surplus stock.” And that’s despite a collapse in the number of homes being built, from 800,000 in 2006 to fewer than 100,000 this year.

So what’s behind the surprising resilience of Spanish prices, if not a physical shortage of property? Obviously there are pockets where things are worse – all those horror stories from expats having to sell at huge discounts, for example.

But by and large, what’s propped up prices in Spain is the same as what saved the British property market from harder falls – interest rates being slashed.

Source: www.moneyweek.com

The project should lead to the creation of 25,000 jobs directly, with an additional 80,000 indirectly over the full period of the project. The 15 years development project will be broken in three 5 year stages, with work to commence as soon as 2011.

The project location should lead to its long term sustainability as it will be located within easy reach of the Malaga airport, the new ring road, the university, the port and the business and technology areas. Additionally it will be within easy access of the rest of the Costa del Sol.

Not only a commercial and industrial development project, the area will also create new parks, wide avenues, green zones, leisure and hospitality facilities with 20% of the project to be designated as residential housing. This should help the are to becoming more active and dynamic area. They may even de3cide to include a monorail transport system connecting the area to the nearby airport.

Although it could be argued that this is not the best climate to start such an ambitious project, the recent expansion of the airport means that in the following years quite a few of the Costa del Sol businesses based at the airport will need to find new premises. This could be an additional opportunity of the Alhaurin de la Torre project.

Regards
Andrew Bellés

The downgrading of Spain was done for strange reasons. Spain’s has a debt to GDP of 90% (against 144% of for Greece) and a budget deficit of 7% (against Greece’s 14%). More importantly, the spread over German bunds is 250 bps against 700bps. With an AA rating (compared to Greece’s BB), even after the recent downgrading from AAA, Spanish creditworthiness is strong.

We are living in a strange world where everything that is said can be published and then becomes a self-fulfilling prophecy. The role of the media is important, but also the way the authorities communicate is critical.

Jose Luis Rodriguez Zapatero and his Government need to stick to the facts rather than threatening the rating agencies or the markets. I happened to be in Madrid last week on the day Spain was downgraded. It was portrayed by as a catastrophic situation. Now is not the time for over dramatization and the endless shows of the European leaders give more an impression of confusion than leadership.

Whoever launched the rumor of a $ 350 billion IMF financing for Spain that made the markets immediately tumble must be the same people who spread rumors to cover their short positions. Unfortunately short sales in fixed income are neither well regulated nor monitored. This was insane. But the fact that the market believed the rumor for a few hours is in itself a sign of its lack of knowledge.

The Spanish problem is totally different from that of Greece and these two should not be confused in the market. The Zapatero Government has been slow to act forcefully to the problems in the “cajas de ahorros.” These savings banks are mostly providers of mortgages and many are close to collapse and will only survive through consolidation. Local politics have delayed some of those transactions and the Spanish Government has not acted as decisively as it should have. Yet this is ultimately more of a private sector problem, since those cajas heavily borrowed abroad benefitting (until now) of the public sector ‘s AAA rating.

The largest Spanish banks, especially Bilbao Vizcaya and Santander had limited exposure to the subprime markets and are perfectly capable of weathering the storm of the real estate market collapse in Spain.

Contagion should only happen when there is an immediate connection between the issuers. While they share the commonality of the Euro, and therefore the slow growth in 2010, the decrease of the value of the European currency is also benefitting to them. Beyond that the situation of each individual country is specific and amalgamation makes no sense.

The amalgamation could provoke contagion, but it definitely does not need to be the case.

Source: The Huffington Post

As is typical with most socialists this system will work on a sliding scale and will of course penalise those that earn more. From 2011 if you earn 17,000 or less a year you will be entitled to mortgage relief. Over 17,000€ it will be on a sliding scale and once you reach 24,000€, no relief for you!

But why implement this in 2011, instead of now? Like other nations? Well the reasoning seems to be that by implementing it in 2011, it will motivate buyers of primary residence to maybe not wait to see if the market drops further, but instead purchase now. If it works the idea is to help clear up the new/unsold property, estimated at nearly 1 million properties, found throughout Spain.

And in the short term this might even work. My issue with this though, is that it will be hitting the Spain’s main engine of growth, the middle classes. The rich, will not be affected and the working classes will not benefit as unless the household earns approximately 17,000€ or more, they will not be able to afford to purchase a property anyway!
So who else wins or loses under this scheme? Well banks are definitely going to benefit, as they will be giving out the mortgages. Developers in the short term will also benefit as they will be able to shift a lot of their unsold/new stock. Although with the increasing amount of properties that developers have been handing over to the banks to clear their debts until recently, the banks will also be winning via the sale of properties. And in the long term developers could possibly lose out from all those who are buying their main residences. But let us be honest, developers are going to lose out in the future regardless as their current business model for the residential market (mass building) is dead and buried.

In the governments defence though, they claim this is a ‘progressive’ policy and in a way it is. Via a range of studies it has been shown that home owner improves a child’s performance at school. Home ownership also makes you a ‘stakeholder’ in the community. The idea being you as a property owner will take a more active interest in your surroundings. But as with most studies, the methodology and results are open to interpretation.
In either case, many here in Spain feel that Zapatero has chosen political expediency over long term economic performance. Either way the main opposition party (partido Popular) have confirmed that they will reverse this plan if they are elected.

Regards
Andrew Belles

Understandably any drop in price is generally seen in a bad light, but considering the unprecedented situation will all find ourselves in, it is not unexpected. Especially since every news report about property prices here in Spain or indeed anywhere are about falling values, people unable to sell, etc… And when you are bombarded with such negative information for long enough you start to believe it. I have even noticed that several British online sites, the Independent, telegraph, etc.. have become more upbeat after realising that they have shot themselves in the foot by publishing such negative reports (less advertisers) all the time.

Back on point, why am I pleased? Well when I read the IMIE index (produced by TINSA) for January, the report claimed that prices were down year on year 12.6%. Not good. The following report for February gave a year on year figure of -10.7%, not good but alot better than January, and now for March the figure is -11.5% for prices along the Mediterranean coast.

By comparison year on year price changes for the last 3 months for all of Spain have been January: -10.1%, February: -9.0% and March: -9.7%

Anyway back to the Mediterranean coast. What these figures tell us, is that we might finally be seeing the  market is bottoming out. We are of course talking about a huge area that these percentages are referring too, and without banks lending at the previous rates, vendors will still be expected to make reductions on selling prices. But if this trend continues we might see prices stabilize at around 11.9% lower than they were last year with prices creeping up at the end of 2009 or by mid-2010. Of course this will vary from Costa to Costa and from town to town. And of course this does not take into account all the different ways our beloved governments are trying to spend our money which we all hope will jump start the market. But either way, without being overly optimistic, we might finally be seeing the light at the end of the tunnel.

Regards
Andrew Belles

I am sure you will all agree that we all need to focus and getting the best advice and making the most of our assets, therefore, Siddals have been kind enough to allow me to print their articles on my site, as long as they are given credit (of course) and an email address should anyone wish to enquire.

About Siddalls

We’re a long-established firm of independent financial advisors (we can trace our name back to 1883), with specialist expertise in the issues facing people moving or living abroad.
With offices in the UK, France, Spain and Australia (partner), we can help make the transition to your new life is as smooth as possible – managing your finances here as you prepare to make your move, and continuing the service overseas.
Whatever your circumstances and future plans, we can advise you on investments, wealth management, pensions, insurance, inheritance and tax planning. Everyone you deal with at Siddalls is professionally qualified and highly trained, and we’re regulated not only by the Financial Services Authority (FSA) in the UK, but also by the appropriate authorities in the countries where we operate.

John Siddall Financial Services Limited is a company registered in England & Wales with company number 2333489
Registered office: Trinity House, Anderson Road, Swavesey, Cambs, CB24 4UQ
VAT Number: 514 0358 80

Who do we help?

We give advice and support to people of all ages, with all kinds of desires and ambitions. Some are planning a new life for themselves and their young families. Some are retired or nearing retirement and moving for health or lifestyle reasons. Others are taking their first steps abroad and buying a holiday home.
Whether you’ve just had the ‘let’s move abroad’ idea on your way to work this morning, or are well advanced in your planning, we can help you.
We also work with people who’ve already moved abroad, and now realise they need professional financial help to make their new life run more smoothly. And some of our clients are those who’ve been there and done that, and now want to move back to the UK.
Everyone we help has one thing in common: they want to make the most of their money and property, both abroad and in the UK. Which is where our expertise comes in.

Our accreditations

Because we’re experienced, knowledgeable experts in the financial aspects of moving abroad. You’ll also find us friendly and professional – and we explain everything in plain, everyday language.
We have offices in the UK and abroad, so you always have someone nearby to talk to. And because we’re ‘on the ground’, we’re fully up to date with all the relevant finance regulations and other local issues.

Most importantly, all the advice and services that we offer is fully authorised and regulated in every country in which we operate.
Some similar companies operate without authorisation and you should be wary of these. There are 3 golden rules when selecting a financial adviser:
1. Check that they are fully authorised.
2. Take references on them.
3. Never pass your savings and investments to them. A good financial adviser will arrange for your savings and investments to go directly to the reputable bank or insurance company that they have recommended.

UK
In the UK we are authorised and regulated by the Financial Services Authority.
John Siddall Financial Services Limited is a company registered in England & Wales with company number 2333489
Registered office: Trinity House, Anderson Road, Swavesey, Cambs, CB24 4UQ
VAT Number: 514 0358 80

France
In France we are registered as Conseil en Gestion de Patrimoine et Courtier d’Assurance RCS BX 498 800 465.
We are also registered with the Organisme pour le registre des intermédiaires en assurance -  ORIAS 07 027 475, Garantie Financiére et Assurance de Responsabilité Civile Professionnelle Conformes Aux Articles L 512-6 et 512-7 du Code Des Assurances.
In France we also have a ‘passport’ issued by the UK FSA to provide financial services.
Siddalls France SASU, Parc Innolin, 3 rue du Golf, 33700 Mérignac

Spain
In Spain we have a ‘passport’ issued by the UK FSA to provide financial services.

Australia
Our partner company in Australia – Global Pension is a Corporate Authorised Representative of Genesys Wealth Advisers Ltd, a holder of an Australian Financial Services (AFS) Licence.

Why do you need our help?

There are two main reasons people come to us: to take full financial advantage of living abroad, and to avoid the many (often hidden) pitfalls.
Different countries’ tax regimes, laws and systems related to investment, wealth, property, inheritance and pensions can be a real minefield for the inexperienced. Currency fluctuations can be extremely costly, and language nuances can be baffling. So we can help by guiding you through these complexities, to make your money work harder for you in your new life.

How we work

Step 1 – We get to know you
We’re here for you. You’ll find our contact details all over this website, we are not an internet company and we welcome calls and e-mails from you. We’re happy to deal with any query, large or small, and we’ll take as much time as you need us to.
We understand that your situation is unique. So we won’t offer advice until we have a clear picture of your circumstances, aims and timings.  To help us build that picture, we talk to you or visit you but to help us get started we do ask you to fill in our online questionnaire and e-mail it back to us. If you’d rather download the form and then post your completed details to us, please do.  The information you give us helps us choose the person in our team whose experience is most relevant to your situation. You can be sure we’ll keep everything in the strictest confidence.

Step 2 – You appoint us
When we fully understand your needs, we’ll give you an outline recommendation of our services – with no obligation to you.  It is then up to you to decide whether you want Siddalls to help you with your finances.

Step 3 – You get a personal report
We research the financial markets and provide a bespoke report for you. We charge a fee for this report but can also work on a commission basis should you want to purchase any financial products detailed in the report. Some people work with us on a part fee / part commission basis – the choice is yours. We do not make any charges without agreeing them beforehand with you.

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On your approval, we carry out the recommendations in the report.

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We provide you with continuous service and support.
We don’t rush you. The way you manage your finances will have a major influence on how successfully you settle abroad. So we help you to plan carefully, and make full use of our expertise.

Our history

Siddalls has been providing financial services since 1883. We set up our current UK head office in Fareham in the 1960s, meeting a growing need for investment advice and management, and pension planning.
Until the 1990s, we were dealing mainly with people in the UK – but as more and more of our clients began moving permanently to France, we began to develop our services to help them deal with the specific financial issues of relocating. We opened our French head office in Bordeaux in 1996, and more French offices soon followed. In 2000, our acquisition by the IFG Group Plc gave us the extra resources we needed to expand into Spain and Australia.
Today, Siddalls is recognised as a leading specialist in the financial aspects of moving or living abroad. We help hundreds of people every year as they adapt to life in a new country, advising them on how to make the most of their money and property.

IFG Group Plc

All companies within the Siddalls Group are wholly owned subsidiaries of the IFG Group Plc.
The IFG Group is a financial services company, with headquarters in Dublin and operations in the UK, Isle of Man, Jersey, Cyprus, Spain and Switzerland. Its main activities include providing independent financial advice in Ireland and the UK, mortgage and title insurance services in Ireland, and international and corporate trustee services.

If you would like more information fron Siddals email Spain.Enquiries@siddalls.net

Regards
Andrew Belles

First let us have a look at planning approvals. According to the statistics, planning approval is 58.1% with only 252,916 approvals in 2008. Still a high figure by most standards, but believe it or not, this is Spain’s biggest fall on record, not surprising considering the last property boom was the largest in Spanish history, with the largest building boom, etc…
On a positive note for those involved or reliant on the residential building sector, VPOs (subsidised housing) rose by 3.6%.

Now let us review property sales. According to the information I’ve managed to find, the Spanish property market shrank 29% in 2008. What that means in is that there were 561,500 property sales in 2008 compared to 788,500 properties in 2007.

Of the 561,000 property sales, 296,500 were for newly built properties (a 13% drop) while 265,000 were for resales (41% drop).

Over the last quarter of 2008 there were a total of 113,300 sales, with new builds at 64,500 and resales at 48,800.

Now although the figures are not good, how can a shrinking market be good? What I do see as a good sign, is that even with the financial crisis last year and all the turmoil surrounding it, properties were still being bought and sold.

What is interesting from the statistics is that looking figures for 2008, newly properties made up over 50% of all the sales. Believe it or not this is not surprising. Many of these sales would have been on properties that had been purchase in 2007/6/5 that are now only going to completion. This year we should start to see newly built properties make up a lower percentage of the total.

So obviously properties have been sold in Spain in the last year, but as you can imagine at reduced prices. Although of course unique properties or those that cannot be easily reproduced (location, quality, etc…) are holding their prices a lot better than many of the mass built properties found in some areas.

Regards
Andrew Belles

The plan is that town halls will help stimulate the economy by spending 8 billion Euros (of a total of 33 billion) on small infrastructure projects that cost up to 5 million Euros. The idea behind this is that it will help get many on the current unemployed back to work and improve the existing infrastructure of many of the municipalities. This will be a particular boon to the Costa del Sol as if will help the area remain competitive in the tourism sector.

Currently there are many outstanding projects that have been pending throughout the Costa del Sol, which we should now see get the go ahead.
The danger of course is that in recent years a lot of municipalities have seen cases of corruption leveled at the town halls, I’m looking at you Marbella! Although it should be noted, there has been a large and very public attempt to clean up the town halls.

Of course there is no miracle cure to the recession and this stimulus will only have a limited effect. In the short term, it will get many back to work, what need to be done is for town halls to invest some of these proceeds into education projects to benefit the unemployed through training projects, etc… to give them new skills to find new types of work that will have a more lasting benefit than construction.

It is my opinion that we will see a lot of wastage, what do you expect when you throw money at politicians??? BUT we will also see big improvements in some municipalities. I believe that people like Esperanza Oña, the mayor of Fuengirola, will use the money constructively to further improve Fuengirola. Her track record is already quite impressive, so let’s hope she and likeminded mayors keep it up!

Regards
Andrew Belles

Well let’s have a look at some statistics.
According to INE (National Statistics for Spain) the total population of Spain in 1996 was slightly under 40 million, remember unemployment was 3 million, from the start of 2009 the population of Spain has reached 46 million! It should also be noted that a majority of the 6 million increase consists of people of working age. Of course these figures are from people officially in work. As I’m sure many of you know, if you have lived or worked in Spain, many people might be unemployed (officially) but are working (unofficially).

Unfortunately Spain seems to always have had the issue that its unemployment rates have been higher than the EU average. But it has also been one of the main engines of growth in Europe for the last decade. It seems that extremes always appear to apply here. When the neighbouring economies are doing badly, things are that little bit worse here, but when they are doing well, it goes very well here in Spain.

I’ve also been looking into the IMF (International Monetary Fund) preliminary findings on Spain and several important bits came up

Quoting from the IMF findings:

“… The authorities (spain) response has been forceful and earlier than EU partners with market-based banking policies and substantial fiscal measures.”

“Banks have held up well so far owing to sound prudential regulations and supervision and the strong traditional retail banking model”

“In conjunction with EU partners, Spanish authorities have reacted promptly to mitigate the effects of the financial turmoil while preserving a market-orientated system”

Nothing quite like positive statements form the IMF to instil confidence in a country. Of course this does not mean spain is doing everything perfectly. Three points that Spain definitely requires to take on-board are
“More significant reforms than currently contemplated are needed to achieve a vigorous medium-term recovery and avoid a potential L-shaped outlook”

“Product and service market reforms require a strong and full implementation to deflate margins and bolster productivity”

And

“labor market reform is the most important missing policy issue.”

From a personal point of view I feel that Spain still has great potential for growth and there is no reason why we can’t see this happen. As always the danger is that the politicians have to be willing to implement it. As luck would have it (in a way) its up to the socialists to implement these changes. If they do propose them, the PP (right-wing) will support them. Which to date has happened. Of course both parties are still trying to score points of each other but as long as they implement these changes there is hope.

Regards
Andrew Bellés

These postponed payments can go no higher thatn 500 euros a month and must be repaid from January 2011 in instalments. Although this measure would not apply to all mortgage holders, only those with mortgage no higher than 170.000€. Even so, this should assist up to 500.000 people.

According to the European Commission, it is expected that the Spanish Economy is to shrink by 0.2% next year

Zapatero also announced several other tax measures to help home owners and those saving to buy a house

The Spanish government would also give a 1.500€ tax break to companies that hire unemployed people with family responsibilities. On a more interesting note the government will also offer incentives for hiring in industries focused on research and development, an important industry where Spain lags behind, and for unemployed workers who become self- employed

He said the measures focused on employment would cost about 170 million euros in 2009 and 2010.

Regards
Andrew Bellés

The Bank of Spain claims this decline is due to weaker domestic demand and a worsening of the global economic crisis. Spain’s gross domestic product climbed 0.9 per cent relative to the third quarter of last year, or half the inter-annual growth registered in the second quarter.

This decrease is due to a lack of consumer confidence, increased unemployment and the erosion of disposable income due to higher inflation.

On a more positive note inflation across the 15 nations that share the euro has fallen to an annual rate of 3.2% this October, which it is hoped will lead to a cut in interest rates next week as this gives the European Central Bank (ECB) more room to manoeuvre.

The ECB last cut rates to from 4.25% to 3.75% earlier in the month in a co-ordinated move with the Bank of England and US Federal Reserve. It is now hoped that there might be a further half-point cut next week bringing it to 3.25%.

If this does happen it should alleviate some of the pressure that is affecting the Spanish economy as it has been particularly hit by high inflation over the last few months.

Regards
Andrew Belles