I've worked in the property industry here on the coast for the last eight years and I am writing this thread to start a discussion amongst the members of this group and to get your opinions. Most of the people I know here in Marbella work in the industry and I suspect that most of the members of this group do too. So, the question is, are we in the middle of a short-term slowdown, or is the market buggered for good?

Since I've started this thread, I'll give you my opinion. I started noticing a slowdown in the middle of '05, things trundled along for '06 and got sharply worse in '07. The whole credit crisis/Northern Rock mess hit the fan in August of last year and it has been just grizzly since then. So we are now three years into it. We've all noticed the empty former real estate offices up and down the coast, I've heard a figure of 50% of real estate companies shutting down and it sounds about right. Those still in business are struggling to make ends meet with one or two sales of second hand units a month when 10 or 20 used to be the norm. Of the previous big boys, Interrealty is gone and Viva has shut most of its offices. The sale of off plan properties is simply non existant. The news media in the UK, which sang our praises a few years ago, now take great delight in giving us a good kicking.

And yet. Agents I know still going to property shows in the UK and Ireland say that they are well attended, people still come and talk to them even if very few are willing to come down on inspection trips. They say that they still want to have a home in the sun but are put off by stories of the Valencia land grab laws, the fear that properties in Spain are not secure, that a building licence is not worth the paper its printed on. And yet they still come to traipse around the exhibition halls oogling properties. Friends in business in the UK and Ireland say that everyone grumbles about money, but they are still spending as much as they used to. So what's going on?

I believe that the problem we have is not a lack of money, but a lack of confidence, particularly in Spain. Yes, our customers in the UK can no longer treat their homes as ATM machines, the vaues of their homes may have slid but have not plumetted, their jobs are still secure. UK interest rates are dropping so that their monthly mortgage costs are slowly reducing, even if higher inflation is currently cancelling out this advantage. Most economists expect the first drop in the Euro interest rate before the end of the year. The whole Marbella corruption saga is slowly wending it's way through the legal system, but we should start to see the beginning of its conclusion by the end of this year. The new PP Marbella council under Angela Muñoz has done a great job in presenting the new PGOU to the Junta de Andalucia in double quick time and we should see it approved by the end of the year. At that stage a few token buildings will be demolished (Banana Beach comes to mind) but everything else will be regularised. The major global banks are working hard to identify their losses from the sub-prime debacle and should have a much clearer picture by the end of this year (are you starting to see a trend here?). They will have to start lending again soon, the business of banks is to lend money, no lending, no profit. No profit, no bonuses.

So anyway, there you have it, my €0.02 worth. I reckon that '09 will start to see a slow return to a normal situation, not of course anything like the boom years, but a steadier, more mature market. Most of the cowboys and fly-by-nighters have moved on (Bulgaria anyone?), confidence will slowly return and a four year build up of demand should start to come into force. Building work has evaporated and it will take developers a further couple of years to respond to any new demand which will mean that the current glut of built and underused properties will be slowly digested.

But then, I'm a salesman and by definition an optimist ;)

So what do you think?

Great post and a lot of valid points

I know that Marbella council are looking at PR options to try and improve the image of the place and there's so much that could be done there!

I vaguely work in the property market too (but web development/seo) and we've totally moved away from sales and are concentrating on lead generation which we then pass on to reputable and decent (almost impossible now) sales people. As you've said there is still a great amount of interest in property over here (we get loads of leads still) but the amount that convert to sales is pathetically low.

Off plan is still chugging along slowly but ours tend to all be in Murcia, we are still getting quite a few ITs booked too

I had to laugh at a feature Engel & Volkers did in this months Essential magazine (I think it was Essential anyway), I'm sure they must be living in a different Andalucia to us.

Are you attending the LPA conference on Thursday?

I think Engel and Voelkers on the Golden Mile are still seeing property change hands.  I know Sierra Blanca is still very popular as a lot of the people who buy up there aren't as affected by slow economies and finance issues etc.  That said I don't think its just Spain you have to consider here.  The UK property market is flat and has been for some time now.  America is screwed except in hotspots like Beverly Hills etc, according to a couple of pals I have there.  The Euro is helping to kick Spain in the nuts, but who knows.  I think it has to come back eventually because after looking a various places to spend my time, Marbella always fits the bill with the weather better than most other places and that will never change.

I guess the world markets and banks have to sort themselves out first and start lending money to people again, until then, people will struggle raising finance to consider a second home or even a first home anywhere.  

A regional airport in the UK has marked its third anniversary by revealing that is continuing to attract more air passengers.
Doncaster-based Robin Hood Airport said passenger numbers for last month were more than 12 per cent higher than they had been 12 months earlier.
Hugh Lang, a director at Peel Airports, praised the airport for this strong growth, describing the size of the increase as "something to be very proud of."
Services to Spain were found to be in particularly high demand last month, which could be due to the fact that Easter fell in March this year.
According to the Association of British Travel Agents, Spain was the "outright favourite" for Britons who chose to venture abroad during this period.
This verdict is reflected in Robin Hood Airport's list of the five most popular services in March.
Direct flights to Alicante occupied the top spot, while routes to Malaga and Tenerife were listed in fourth and fifth place.

The Spanish city of Murcia could be set for a property boom once its revamped airport is up and running, experts have suggested.
According to the Telegraph, Corvera Airport is currently undergoing a major upgrade and should be fully operational in two years time.
The newspaper believes that the opening of the facility could lead to growth in the local property market, as the introduction of new flights should boost international interest in the region.
However, house prices in Murcia are currently much cheaper than in many other parts of Spain.
This means that people who enter the market early could stand to collect considerable returns when the market experiences its anticipated growth.
The Telegraph observed: "Property prices in certain 'emerging' parts of Spain compare favourably with newer rivals such as Cape Verde and Bulgaria. "
According to A Place in the Sun magazine, Spain is currently the most popular location among overseas property buyers in the UK.

Investors could be able to take advantage of the current problems in the global economy, according to experts.
Currency specialist HiFX stated that the credit crunch and the resulting economic slowdown has led to some prospective investors "getting the jitters".
However, the organisation said the financial problems across the world are also having a negative effect on property sellers.
Therefore, people could be able to persuade estate agents who desperately need to meet their sales quotas to offer them a good deal.
Mark Bodega, director at HiFX, commented: "Buyers should remember that a drop in demand will mean vendors are also feeling the pinch."
However, he recommended that investors get a forward contract to fix the exchange rate during the transaction.
This, he said, would prevent people being affected by any market fluctuations and guarantee the final cost of their purchase.
The advice comes after ShelterOffshore.com stated that the credit crunch is not dampening British people's "insatiable desire" to own a foreign property.

Regards

House prices static in Malaga city and falling in some east coast municipalities

A new study tells us that the crisis in the property sector is greater than expected, and warns that we will not see any improvement until the end of next year

The slowdown in the property market is being reflected more and more over recent months in house price statistics. The last set of figures, published by the Salvago Inmobiliaria company, shows the evolution of house prices in the Malaga region over the first three months of this year, from January to March, and they indicate clearly that while prices have remained static along the western coastline and in the city of Malaga, they have fallen by 4.3 per cent on the eastern Costa del Sol. Also, the average price of new houses has risen by only 2.3 per cent over the past year, to reach a figure of 2,599 euros per square metre built.

The two areas that are safe so far from falling house prices are the western coastline and the interior of the province. In both regions, the price of housing has risen by five per cent. In the case of the western coastal area, this rise has been 5.8 per cent, due mainly to increases in prices of new houses in Benalmádena (15.6 per cent higher with respect to the figures for 2007) and Estepona (where the increase has been 10.45 per cent). By contrast, house prices in Mijas fell by 6.2 per cent, while prices in Manilva, which has seen a huge increase in building activity over recent years, rose by only 1.6 per cent.

Metropolitan area

In the case of the interior of the province, the Salvago study shows that residential developments in municipalities close to the city of Malaga, such as Alhaurín de la Torre, have suffered decreases in house prices of as much as 13 per cent, while in Alhaurín el Grande, the drop has been nine per cent. Antequera suffered a decrease of 6.4 per cent, although there have been increases in some inland areas, such as Cártama, Pizarra and álora.

As far as the eastern coastline is concerned, the biggest drop has been in Rincón de la Victoria, where prices fell by ten per cent. But prices of new houses rose by 6.9 per cent in Vélez-Málaga, whose proximity to Malaga city has resulted in many new developments being built there.

In Malaga city, the fall in house prices is most clearly seen in coastal areas east of the centre, and in Campanillas and Churriana, where prices have dropped by 15 per cent over the past year. In the eastern area of the city, the price per square metre built has dropped from 4,504 euros to 3,799 euros. There are some areas, nevertheless, where prices have risen, especially in the Rosaleda area, the prolongation of the Alameda and the city centre. These areas are still attracting many new buyers, and prices here have increased by as much as 51 per cent.

The Salvago study concludes that the deceleration in the property market in the province of Malaga will be worse than previously expected, and that the sector will not recover at least until the end of 2009.

Regards