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January 2008

29.1.2008 - Property Developments in Mallorca Halted

The president of the Association of Balearic Developers, Gabriel Oliver claimed at the weekend that the recent announcements from the Council of Mallorca and the Balearic Government regarding development moratorium had created a climate of “legal uncertainty” such that the Island’s developers were seeking alternative locations to invest that offered a planning framework of greater stability.
Against a backdrop of a weakening market, the legal / planning uncertainty is adding significantly to the risks associated with many major projects in Mallorca, according to Sr Oliver, claiming that the impact will be felt in terms of up to 10,000 job losses. The problem is not the issue of land protection but the use of moratorium, rather than a robust territorial land use plan, to achieve it continued Sr Oliver arguing that the all the work of the last 10 years to put in place the Plan Territorial Insular de Mallorca (Mallorca land use plan) and the associated planning framework has been lost by these most recent changes.
Editors Comments: While Developers are easy targets for politicians, environmentalists and residents, and no one can argue that many have not made rich pickings in the unprecedented Spanish construction boom of the last 6 years, it is equally fair to add that development, as an economic activity, is inherently risky. It is only reasonable for a developer, like any other business, to expect a fair and level playing field when it comes to planning and investing time and money in their projects. For politicians to move goal posts, on an ad hoc basis, taking development land in and out of circulation using moratorium, is not a reasonable long term way to resolve and manage land use planning and protection issues. In an emergency there may be a justification but developers like any business deserve to make decisions based on a robust long term land use plan and not be at the whim of political change.

Story provided by Mallorca Property News (www.mallorcapropertynews.com)

 

29.1.2008 - Solar Panel Parks in Mallorca

 

The approval of 3 large solar panel parks on rural land in the central Mallorca village of Porreres has opened a tense debate between residents, environmentalists and politicians trying to balance climate change and C02 emission targets, with local visual and environmental impact.
The Govern (regional autonomous Government for the Balearic Islands) has given the green light to a new installation in Porreres which will extend to between 70,000 and 90,000m2, considerably bigger than another local park of Es Pagos which at 60,000m2 was, at the time, the biggest in the Balearic Islands. The new project has all permissions and licences in place and will commence in the next few months. A second 30,000m2 project is under consideration in Son Oms.
One of the biggest concerns is that under rules established by the previous Conservative Government local Town Halls have no say on these projects. So while local residents raise understandable concerns with their local politicians the latter are simply not involved in the approval process.
Local environmentalists while keen to encourage such projects equally understand this can not be done at any cost and have urged politicians to continue with plans to introduce new parks but to locate them on brown field sites
News story provided by Mallorca Property News (www.mallorcapropertynews.com)

15.1.2008 - Luxury Mallorca Property Bucks Trend

 

While most sectors of the Mallorca, and wider Spanish, property markets are experiencing difficulties with stagnating, or in some areas falling prices, top end properties continue to defy the general economic malaise with demand remaining strong and prices predicted to rise by around 10% and up to 20% in some cases.

Calvià is the hot spot with Bendinat, Portals Nous and Nova Santa Ponsa showing the the highest prices and strongest demand. The explanation can be seen on both the demand and supply sides. Regarding supply the reality is that there remain few if any front line plots and thus demand has to be satisfied from the existing stock. On the demand side the return of some strength in the German economy is cited along with the overall number of wealthy international cash buyers seeking property in Mallorca.

Interestingly many of the latter are buying without the need to obtain mortgage finance in Mallorca. In some cases they are simply cash buyers while in others they are obtaining finance in their countries of origin where they are facing less restrictions than those being imposed by the Spanish lenders.

  

Story provided by Mallorca Property News (www.mallorcapropertynews.com)   

View HTM file9.1.2008 - Spains Economy Slows

 

An article in yesterdays UK Financial Times highlighted some of the woes of the Spanish economy, namely rising inflation and the ongoing credit squeeze amongst many of the regional and national saving banks.

The article goes on to confirm the governments revision to it's estimate for economic growth in 2008, down to 3.1% from 3.3%, a figure it suggests many commentators still view as optimistic.

Whether the picture is as bleak as suggested across Spain, including Mallorca, is open to debate. While the credit squeeze is real when compared with previous years of almost unabandoned lending, in most cases finance is still available, all be it the banks are being more cautious (lower loan to value ratios; wider interest rate margins; stricter due diligence etc). Consumers with high levels of debt are also feeling the pinch due to rising interest rates, part of which is still to feed through where loans are reviewed annually. Eequally most agree the Euro interest rate cycle is at or nearly at the top so things should improve towards the end of 2008 and in 2009.

Across Spain the unprecedented construction boom, that has seen over 800,000 units a year coming onto the market is and must slow (real underlying demand is estimated at around 450,000 units). Furthermore there is little doubt that there will be more casualties amongst the many highly leveraged Companies in the sector. Some of this will feed through to the wider economy, given the importance that the construction sector has had in driving the boom of the last few years. However key to performance of the Spanish economy in 2008 - 2009 will be the extent to which the service and industrial sectors can pick up some of the slack generated by the slow down in construction.

In relation to house prices there is no doubt that many regions are experiencing weakening values although few are seeing prices in free fall. Where the supply side remains relatively controlled, and demand is broader based, such as Mallorca, all indications are that real values should remain relatively firm, where properties are good quality and realistically priced. 

Story provided by Mallorca Property News (www.mallorcapropertynews.com)