Impact of Banking Crisis on Marbella Property Market
The news coming from Spain every day makes for Gloomy Reading. New Items such as these ones arriving on a daily basis do nothing for a property market in free fall.
“SPAIN has been forced to part-nationalised its fourth-largest bank, Bankia, in a dramatic move to try and contain the escalating financial crisis as fears grow over the sector’s exposure to property assets.
Spain’s central bank said the lender had asked for a €4.5bn bailout loan to be converted into shares, granting the Spanish government 45 per cent of the bank in return.
The turmoil at Bankia contributed to huge stock market falls across Europe yesterday, with banking stocks plunging to levels not seen since the depths of the financial crisis.
How does all of this affect the Marbella Property Market? We are finding that our clients are adopting a wait and see attitude and are worried to commit to a purchase when Spain is in such turmoil. Many experts think that the prices will fall even further later this year. However anyone who knows Marbella realizes immediately that “Marbella is not Spain”. Luckily for us we live in a beautiful environment with a wonderful climate. Yes things are bad but they are bad all over! At least here the sun is shining and a round of golf makes a nice day of any day!
The areas around Marbella town, Golden Mile, Puerto Banus, and luxury estates such as Sierra Blanca and La Zagaleta see their values holding. In these areas there are few bank repossessions and in many cases the larger properties have been financed by private banks that prefer to work with their clients when in difficulty, rather than go legal.
In the past 10 years the new developments built close to Marbella are mostly superior complexes with very high specifications and command good prices even in a recession. There still is more demand than supply for this type of product.
So far this year what we are selling is invariably where the “price is right”, time after time if we have a good property in a good location, price it right and it will sell.
When we speak to owners we advise them to price their unit at the best offer in the complex, depending on orientation, furnishings and position in the urbanisation and it works! I am inundated with owners desperate to sell and asking what to do and the answer however unpalatable is always the same.
There are many clients coming now from Northern Europe especially from the Scandinavian countries who are cash buyers and looking for a bargain, they know they can pick up a property at almost half price from the top peak of 2003. They have to be able to see the value for money. They tend to buy in the price range of 200 to 350.000 Euros. However the decisions are quick and they can complete very quickly as they come to Marbella with the finance in place.
Also selling briskly are final units of stock from developers who have slashed the prices and worked out a deal with the banks to be able to offer a high % of finance.
So yes it is impacting us big time and making daily business a real struggle but it is also causing a flurry of activity where buyers are deciding that now is the moment to really snap up a good deal!
Across the board from the most palatial luxury home to a simple two bed holiday home the same logic applies. No canny investor is going to spend their liquidity unless its money well spent. Owners who want to sell unfortunately are in the position of having to resign themselves to the market and unless they are prepared to meet the market the prospects are not good to achieve a sale.
We are in the middle of one of the worst financial crisis Europe has ever seen and facing the unknown regarding the Euro but life goes on! Marbella is a great destination and we have some great property at realistic prices.