More bad news from 'Citizens of Europe' Organisation

I am a member of this organisation and this is our latest newsletter:

Expropriation of the expropriators?

In a new section of the National Law on Land (Ley del Suelo) dated 5th March this year, the Government has opened the door for the expropriation of building land if a promoter does not comply with the time limits or conditions established for a building project.

59% of hotel beds occupied on Costa del Sol

58.9% of the hotel beds on Costa del Sol were occupied during April, 8% less than the same month last year. An occupation rate of 62.46% is expected for May. The British are the most frequent hotel guests at 30.32% of the total, followed by Spanish 29.78%, Germans 8.26%, French 6.51, Nordic countries 4.32, Holland 3.9, Belgium 2.48, Italy 2.45 and the United States 2.43%.

Deutsche Bank: Sell shares in 4 Spanish banks!

In a study of the Spanish banking sector, analysts at Deutsche Bank are recommending investors to sell their shares in Banco de Sabadell, Bankinter, Banco Pastor and Banco Popular. The leading European bank points to a strong increase in the non-payment of loans, the high costs of refinancing debts and a rapid deterioration in the macro-economic conditions in Spain.

Economy stalling

Growth in the economy is falling. The numbers from the first quarter are shattering: only a 0.3% increase. This translates to a yearly growth of only 1.2%, but if the trend continues, growth this year could be less than 1%. During the first quarter of last year, the economy expanded 0.8%.
Industrial activity fell 8.2% in March, compared with same month last year.
Spain is now lagging far behind other European countries; the average growth in EU during the first 3 months was 0.7%, Germany has a yearly growth of 2.6%, France 2.2% and the UK 2.5%.

Funds for unemployment only to September

The newspaper "El Mundo" calculates there are only sufficient funds to pay the unemployed until September. 15,506 million euros for unemployment support was included in the state budget for this year, the government estimating unemployment would increase only 9%, however, unemployment is increasing rapidly, presently at a rate of more than 21%.
In a press conference, Minister of Finance Pedro Solbes, acknowledged the situation but insisted, "the public coffers are not empty." Although he did admit the state will have 500 million euros less in tax income this year than foreseen in the budget.

Social Security insolvent

A profound study by the Instituto Valenciano de Investigaciones Economicas (IVIE) on the solvency of the Social Security system, found payment obligations (to the retired) are 31.4% greater than contributions. The professors who conducted the study did not hesitate to say the system is insolvent and is becoming more so for every year.

Construction down 46.2% in February

The number of dwellings approved for construction fell by 46.2% in February. We repeat: from an already low level the number of dwellings eventually to be constructed has declined 46.2% in one month! This is the natural consequence of the 72% fall in sales of the big promoters in the first quarter, from an already low level.

The urban wonder world

A promoter mentioned in the Malaya case in Marbella is trying to intimidate land owners in a village near Avilato sell their land at 60 cents per square meter so that he can build a macro development of 3,500 dwellings, two golf courses and a commercial centre. He is supported in his endeavors by the local PP mayor.
The digital magazine "Observador" on Costa del Sol is reporting that the Malaga Mayor Francisco de la Torre (PP) is contributing to the spiraling price of 10,000 euros per m2. If this goes through, it would mean each of the 25 houses to be built there would cost 570.000 euros.
The promoters of the large scale project Merinos Norte in Ronda have stopped the work on the project, but continued legal action against the ecologists and citizens of the town who are protesting against the project. The company are demanding 6 million Euro in damages from the protesters.

As we reported last week, the Orihuela property company San Jose Inverciones has gone bust, leaving more than 1.000 buyers in a precarious situation, in addition to many local investors having given land or money to the promoter. An information meeting will be held in Hotel Holiday Inn on Birmingham Airport, meeting rooms Trident 1 & 2, Sunday 25th at 16.00 hours, where lawyers from Irwin Mitchell Abogados will be present.

Due to the huge amount of material concerning the present dramatic situation in the Spanish property market, and the economy in general, we have decided to place a collection of important comments, relating the crisis, on our web page under www.c-euro.org. Please go to "Information on Spain" then "Economy" and you will find it under: "Comment on a Crisis".

Carrier of bad news

For the foreign property buyers and owners in Spain, it is important to know about legislation, concerning, taxes, cars, residence permits, communities of owners etc. but maybe the most important information is about how the economy and especially the property market of our chosen country is developing, leading on to such important decisions as:- Should I buy a property in Spain? Should I sell my property in Spain?
Except for some in the property business - who invariably would recommend to buy - hardly anyone is as close to the situation of the foreigners and so tuned in to the property market, without having any commercial interests, than your Association Ciudadanos Europeos.
Looking back through the reports to the members, we can highlight the following:
At the end of 2004 we wrote:
"..2004 registered the first signs of exhaustion in the property boom. Sales are declining or taking longer, prices are not as vigorously up as previously and in certain areas have started to fall. But due to the long gestation time of a property project, the number of new dwellings started up and coming on the market in 2005, will be very high, probably around 500,000.
But some of the experienced and cautious promoters have already put on the brakes."

We were of course ridiculed by the property sector and the foreign language publications, living on the advertisement of this sector, for our warnings.

During 2005 we repeated our observations on several occasions, also warning our members against financing with variable interest loans, saying "The interest rate will go up!" This wasat a time when your bank was telling you not to worry!
In the Yearly Report 2006, written in the end of 2005 and sent our members in January 2006, we asked the rhetorical question, "Was the drop in foreigners purchasing property in Spain," which we had reported about on several occasions during the year 2005, " a temporary one?" We gave this answer:
"Promoters and sales agents are hoping the drop in sales is temporary and that the market will recover. We do not share their hopes! The high prices do not allow for any appreciation value and have driven investors into the stock market or to other countries where property and the cost of living is still cheap. The massive construction programs with building cranes everywhere is not attractive to retired people seeking tranquillity. The urban planning abuses committed against small landowners, promoted by the LRAU and LUV-laws, have scared many buyers away. Greed and corruption has damaged the reputation of the country. Spain has lost much of its attraction.
All signs point to a deepening and prolongation of the crisis on the Spanish property market."
In the beginning of 2007 we published a recommendation to all foreigners not to buy a property in the Valencia Region in the present circumstances. Again there followed fierce attacks from the property lobby, with the Federation of Promoters in Alicante threatening to take us to court for the damage caused to their business.
We are now getting close to the middle of 2008 and the crisis (still not acknowledged by the Government) is continuing and getting deeper. What we wrote in our Yearly Report for last year (written in the end of 2007) is coming true: "2007 was a bad year, 2008 will be worse!" In the same report we phrased the situation and judgment of what would come in this way: "Property crisis, credit crisis, economical crisis!" The economical crisis is already here and we are clearly heading for a social and political crisis.