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September 2009

23.9.2009 - Spanish and Mallorca Property Market Update 09/09

 

No one has to remind you of the difficult times effecting the Spanish property market, and the local regional markets including Mallorca. Press reports, economic studies, reports from the EU and even none too impartial reports from the Spanish Government itself, all point to “double trouble” in Spain – economic recession as a consequence of the international financial crisis plus the “home grown” property market crash resulting from an economy far too heavily dependent on bricks and mortar and which has not gone into “slow down” but “melt down” following a 7 year speculative development boom of almost unimaginable proportions.

During this time the Spanish construction sector delivered upwards of 700,000 new units per year when underlying long demand is less than half of that (and likely to find a new level of 200,000 per year for the near term). Now the construction companies, from the largest household names down to the local builder, are going out of business by the day leaving an alarming number of unfinished properties on the market, apart from the ever growing stock of unsold completed new properties and, perhaps more worryingly, a banking sector that, to hide its exposure to the construction sector, has in effect become a dumping ground for unsold properties (over 110,000 properties are sitting on the balance sheets of the banks with estimates that this will grow to 150,000 by the end of the year). Add to that the other 800,000 plus new build homes still in the hands of the developers and unsold, and you get a feel of the problem and the difficulty that the property market will have finding a stable base while this supply overhang persists.

I will comment in more detail about the implications for the housing market and Spanish economy of this weight of unsold properties in a separate report as here I want to emphasise the point that  buying off plan is now very risky and even buying completed new build should be approached with some caution to ensure all necessary Guarantees are in place and backed up by the appropriate Insurance Company policies (a legal requirement but one ignored by some of the many developers going out of business, leaving purchasers with no recourse in the event of problems with the build quality in the future).

A recent study of new build properties started 2 years ago suggests 25% are not finished, and are unlikely to complete in the near future, due to cash flow problems and the bank credit squeeze, a none too happy picture if one of those thousands of properties is yours and you have tied up your life savings in the deposit! And don’t think that this problem has reached a peak. Most experts agree that not until mid 2010 will the number of new build properties in the pipeline, and reaching completion, stop exceeding the take up in the market i.e. the stock of unsold properties is going to carry on growing!

My advice - ”be very wary of buying off plan” and where buying a completed new build property make sure you do thorough checks with your lawyer to ensure the appropriate insurance guarantees are in place.

In relation to prices and underlying values, only buy if you are in this for the long haul. I have long maintained that the Spanish and Mallorca property markets would probably not see any return to positive territory until 2012. No one accused me of being too optimistic (quite the opposite!) but I now think it could be some time later. How does 2016 sound for the Spanish market as a whole?

Will Mallorca fare better? Probably. The estimates of unsold stock in the Baleraic Islands are around 16,500 units while the much larger Communities of Andalucia and Valencia are facing an overhang of 176,000 and 155,000 respectively! Even after taking account of the population differences, the situation in these areas, and others like Murcia, are significantly worse. As regular readers will recall I have long maintained that the Mallorca property market has some defensive qualities, which include this “better than Spanish average” supply side picture and a demand side predominated by life style purchasers rather than investors. The strength of the Mallorca “brand” adds further support to the market.

That said it is not reasonable to assume that the Mallorca market can be de-coupled from the wider Spanish property market entirely. Problems of affordability, unemployment and wider general economic weakness effecting the tourism sector are all realities in Mallorca and can not be ignored. Property asking prices in many cases remain high where owners and agents have failed to readjust to the new market conditions and this alone is acting as a heavy weight on the local market. Other asking prices are now more in line with underlying value and thus have a much more limited down side risk. Others should carry a bold “health warning”!.

The conclusion? It is all about “stock selection” ie if you are looking to buy in Mallorca do so with caution and look for the well priced properties hidden amongst the ridiculously over priced. If you are in for the long haul, are a lifestyle purchaser and want to enjoy a home in Mallorca now, rather than sometimes in the distant future, then with care, particularly regarding issues of price and value, then now may still be a good time to buy.

Resources

Mallorca Chartered Surveyors – Mallorca property valuations

Novi Property Mallorca – Property for sale in Mallorca

Properties International Mallorca - Property for sale in Alcudia and Pollensa

Mallorca Real Estate Search - Property Finders in Mallorca

Mallorca Mortgage Business - Best Mortgages in Mallorca

Mallorca Property News - News and views relating to the Mallorca Property Market

Mallorca Property Market Blog - News and investment opportunities in Mallorca

 

 

22.9.2009 - Property For Sale in Andratx Camp de Mar

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It looks increasingly that value for money is easier to find in the Mallorca new property market than in the market in general. Along with the recent properties I have highlighted In Cala Dor and Port Verd these new Town Houses in Andratx, Camp de Mar, traditionally one of the most expensive areas of Mallorca, are worth a look. Enjoying a priviledged position adjacent to the Andratx Golf Course, many with sea views, these properties will be of interest both for those looking for a full time home in Mallorca; golfers looking for an easy to maintain Mallorca golf property less than 30 minutes from the airport; or those looking for a holiday house in Mallorca for their own use or as a rental investment.

The first phase of 2 bed, 2 bath properties start from 418,000€. See “Houses for sale in Andratx” for more information

Contact Novi Property Mallorca for further details

Resources

Mallorca Chartered Surveyors – Mallorca property valuations

Novi Property Mallorca – Property for sale in Mallorca

Properties International Mallorca - Property for sale in Alcudia and Pollensa

Mallorca Real Estate Search - Property Finders in Mallorca

Mallorca Mortgage Business - Best Mortgages in Mallorca

Mallorca Property News - News and views relating to the Mallorca Property Market

Mallorca Property Market Blog - News and investment opportunities in Mallorca

 

21.9.2009 - Property For Sale in Cala Dor – Cala Dor Houses

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We like the look of these two and they are getting close to a price which reflects underlying value.

Cala Dor Villa on complex with pools

Investment apartments for sale in Cala Dor

These are just a couple of examples of properties that Novi Property Mallorca have for sale in Cala Dor via our partners in the Town. Let us sort the wheat from the chaff and bring you the properties that offer real value. 

Resources

Mallorca Chartered Surveyors – Mallorca property valuations

Novi Property Mallorca – Property for sale in Mallorca

Properties International Mallorca - Property for sale in Alcudia and Pollensa

Mallorca Real Estate Search - Property Finders in Mallorca

Mallorca Mortgage Business - Best Mortgages in Mallorca

Mallorca Property News - News and views relating to the Mallorca Property Market

Mallorca Property Market Blog - News and investment opportunities in Mallorca

 

11.9.2009 - Development Plot for sale in Puerto Soller

 

See David Novi's views on an interesting development and investment opportunity in the Port of Soller on David's Blog Mallorca Property Market

11.9.2009 - Mallorca Property Market Comment

 

Green shoots, economic activity increasing, deflation risks diminishing, stock markets rising, business and consumer confidence on the up etc etc. We all read the news papers and listen to the news but the big question for those of us in the real estate market, and in my case the Mallorca property market, is what does this mean for activity levels and property prices?
 
With unemployment levels some way off touching bottom, expect foreclosure levels to increase further, household disposable income to remain under severe strain and consumer confidence to take a knock again. When potential buyers see that the prospects of rising values are a long way off, that activity will also fall back again.
 
Result? Expect house sales activity and prices to remain depressed for a long time and until some stability can return to the market. This is going to be a slow and painful process.
 
Want a positive spin? Underlying values may well be near the bottom (+/- 10%) but remember what I always say about “asking prices” and “values”, they are NOT the same thing! In Mallorca the decoupling in these two figures which should of course be intimately related, has created an inherent risk in the market where buyers must “beware”. Find a property where the asking price and value are the same, or there and there abouts, and it may be a good time to buy. Purchase a property with an inflated price tag without first checking it’s underlying value, and you may well be regretting it for a very long time, all be it while sitting on the terrace with an appetising G and T!
Resources 
Mallorca Chartered Surveyors – Mallorca property valuations

Novi Property Mallorca – Property for sale in Mallorca

Properties International Mallorca - Property for sale in Alcudia and Pollensa

Mallorca Real Estate Search - Property Finders in Mallorca

Mallorca Mortgage Business - Best Mortgages in Mallorca

Mallorca Property News - News and views relating to the Mallorca Property Market

Mallorca Property Market Blog - News and investment opportunities in Mallorca