As one of the most moribund housing markets in Europe, Spain has become a magnet for global bargain hunters. Real estate prices are down as much as 50 percent from their peak during a housing bubble, and investors from Asia to the United States and Britain are flocking to Spain to try to catch the uptick.
British Airways flights to Madrid are packed with London-based real estate executives. The hedge fund Baupost is buying shopping centers, Goldman Sachs and Blackstone are buying apartments in Madrid, and Paulson & Company and George Soros’s fund are anchor investors in a publicly listed Spanish real estate investment vehicle. Kohlberg Kravis Roberts just bought a stake in a Spanish amusement park complex. Big-name private equity firms and banks are teaming up with and competing against one another on huge loan portfolios with names like Project Hercules and Project Octopus.
...continue reading "Spain: Magnet for Global Bargain Hunters"
The downward trend in the property market in Spain is drawing to a close and it is unemployment that is hindering a full recovery, according to the International Monetary Fund.
With unemployment still hovering around 26% the real estate sector is unlikely to move into full recovery mode just yet, says the report author James Daniel, head of the IMF’s Spain mission.
But the report does point out that the country’s economy has ‘turned the corner’ after economic improvements took hold in the second half of last year and continued in the first quarter of 2014. Indeed, it adds that the Spanish economy is now growing at its fastest pace since 2008.
It also says that labour reform and wage moderation are helping turn job destruction to job creation. Compared to a year before, unemployment fell in the first quarter of 2014 and jobs, as measured by social security affiliations, increased by about 200,000 in April.
...continue reading "Spanish Property Market is on the Verge of Recovery"
The European Court of Justice have ruled that Spain’s mortgage law is incompatible with a European directive on abusive practices in consumer contracts, opening the door to more legal protection for households facing eviction from their family home.
The ruling comes in response to a question posed by a Barcelona court in connection with the eviction of Moroccan immigrant Mohammed Aziz from his home in January 2011, after he failed to meet mortgage payments on a 138,000-euro loan granted to him by savings bank CatalunyaCaixa in July 2007.
The ruling will apply to all eviction cases now being processed across Europe but might not be applied retroactively, as pressure groups have been calling for. Amendments to the mortgage law, which is more than a century old, are now going through parliament, and it appeared as if the government was waiting for the Luxembourg-based court’s judgment before proceeding with the passage of the draft law.
...continue reading "European Court rules Spanish mortgage law is abusive"
The Bank of Spain had chosen two consultants so that they value the Spanish banks’ assets.
The purpose of this evaluation is to “increase transparency and definitively dispel doubts about the valuation of bank assets in Spain”, Economy Ministry sources said.
The independent consultants selected are the German Roland Berger, and Oliver Wyman of the United States. Oliver Wyman has a dark point on his curriculum as he classified Anglo Irish Bank as the best in the world in 2006, just two years before this bank was nationalized.
Economy Minister Luis de Guindos refused on Monday any further serious regression in home loan defaults.
The performing loan ratio for mortgages currently stands at 2.8 percent, compared with 21 percent for credit to the real estate sector. The banking system’s loan portfolio is currently around 1.76 trillion euros, of which 656 billion is in the form of mortgages to individual homeowners and around 310 billion to property developers. In a decree approved earlier this month, the government increased provisions for loans to developers to up 45 percent of the value of the credit.
...continue reading "Spanish Banking System under exam"
Excellent article examines German and European Crisis
"The problem here is simple and everyone knows the story by now. Germany benefited from a weak Euro relative to what it otherwise would have experienced had it not been a part of the EU.
Their growth and exports skyrocketed and the lesser nations from an economic and financial standpoint (often referred to collectively as the PIIGS) borrowed from Germany essentially to finance current account deficits as they took advantage of much lower interest rates due to their affiliation with Germany via the Euro.
These PIIGS lived up to their name in eating up every source of financing they could."
"You cannot borrow more than you can pay back and if you do, you will pay for it eventually either via war, severe or hyperinflation, deflation, depression etc.
The market won’t disappear and we will get back to the “good times” eventually. However, the 90s were an aberration where everyone made money like in the roaring twenties, and we all know what happened there.
We have a solid 5-10 years of pain before we can get our house in order and get back to a “normal” economy, if there is such a thing".