Real estate agencies fall victim to slump in property market

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swerve
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Real estate agencies fall victim to slump in property market

Postby swerve » Mon Sep 03, 2007 5:53 pm

Real estate agencies fall victim to slump in property market

Forty per cent of estate agencies in the province of Malaga have closed down in the last two years
Inflated prices, competition, higher interest rates and more cautious investors are the main causes

Anyone with a property for sale will tell you: houses are taking much longer to sell. There is a lot of choice but prices are still way above the limits of most budgets and buyers are taking months to make their minds up. For numerous real estate firms the situation has ended up getting the better of them and agencies all over the province of Malaga are closing down. If fact now, two years after the end of the boom, there are 40 per cent fewer real estate agencies open in the province.
There are plenty of factors causing the industry problems, the main one being the saturation of the market. óscar Martínez is the President of the Professional Association of Real Estate Experts (APEI) and has been in the business for the last 32 years. “There is so much competition; the number of agencies has quadrupled in the last four years. Now there is a slump in the market and many are not prepared to invest in advertising and new ideas, because they didn’t need to during the more buoyant years”, he explains.

The association predicted earlier this year that three out of every ten intermediary firms would have closed down by the end of 2007. Martínez now thinks that their forecast was too conservative as the casualty rate could be as high as 50 per cent. According to the National Statistics Institute (INE), some 12,700 premises are currently registered as real estate agencies in the province. Last year 9,000 offices in the whole of Spain stopped doing business.

Overpricing

Inflated prices have also had a hand in creating the present situation. “People think they own a castle and want to make a fortune for a property that cost a quarter of what they are asking for now”, points out another real estate agent who would rather remain anonymous. He believes that what is now on offer is overpriced, as there are a lot of flats on sale for amounts that no one is prepared to pay.

Nicolás Delgado, the manager of Inmobiliaria Roda, adds that negative information about the real estate sector has contributed to the slump in the market. “People who can afford to buy are thinking about it more now”. He explains that the image many people have of the industry does not help the situation. “In real estate we work hard to make a living; people think we are millionaires, that we pocket a lot of commission, but those of us who work above board and pay our taxes and our employees make just enough to get by. A legal real estate firm has huge expenses”.

He admits that businesses have had to close down or firms have reduced their number of branches, especially the “opportunist entrepreneurs”. “They have disappeared, and the real professionals are the ones who are left, although if things stay like this for long there will come a time when only those with financial backing will be able to keep afloat”, he predicts.

Nevertheless Delgado maintains that families still need to buy reasonably priced housing, and does not foresee a huge drop in prices. “We are no longer selling to speculators, but to people who need a home; there are products at good, affordable prices. Some buyers are holding off because they think that there will soon be a lot of bargains but that isn’t true, because rather than selling at rock bottom prices owners will rent their properties and wait a while.”

The gradual increase in interest rates and mortgage repayments, putting some buyers out of the market, especially people considering a second home, completes the sorry scene.

The legal situation in Marbella should also take part of the blame for the real estate recession in this area. “Marbella has suffered a great deal with the ‘Malaya case’, flats aren’t selling for love nor money”, points out Delgado. Guy Stencel, the owner of Riviera Properties in Manilva knows this only too well. “I worked with British and Irish clients and now few are buying. Everyone in Britain has heard about the mayors and notaries in prison. Now they don’t trust developers or lawyers. They are scared of losing their investment. We have to win back the trust of the British”.

Diversification

So with things looking so bleak, is there a solution? The expert óscar Martínez proposes diversification, with agencies increasing their range of services on offer to include finding the best mortgage for their clients, managing rentals and property maintenance. “We will have to be property services firms; there are always alternatives”.

In time he hopes to see a united sector with more controls and working regulations. “Real estate firms should be subject to controls to protect the client, to make us more reputable. You can’t sell overpriced products and, for example, announce and apply a maximum commission of three per cent”, adds Martínez.

“There’s no other option”

Guy Stencel came to Manilva from France ten years ago. For two years he worked for a real estate firm and then he started his own business in Puerto de la Duquesa. “The first five years went superbly. Then we noticed an initial slump and things went right down in the last two years”, he recalls. “We weren’t selling anything. The business is at a standstill”. Things are so bad that he has decided to close. “I’ve sold my office and my house and I’m going back to France”. He’s moving to Toulouse where, he claims, he can buy a villa with a pool for 270,000 euros. “When I arrived things here were four times cheaper than in France. I bought my house here for 100,000 euros eight years ago and I’ve sold it for 250,000.”

Apart from the departure of British and Irish buyers , the high property prices are also to blame for the current situation. He believes prices ought to drop by between 10 and 15 per cent in order to reactivate the market. “Customers want flats on the beach with sea views for 250,000 euros. Now a two-bedroom apartment with those characteristics costs 320,000”.
It always seems imposible until its done. Nelson Mandela

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MrsP
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Postby MrsP » Mon Sep 03, 2007 6:22 pm

Houses in my village sell fairly quickly :?
Chris

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Postby frank » Mon Sep 03, 2007 6:45 pm

They are not really telling us anything new, nothing that we didn't already know really, but at least they are now admitting it, instead of in the past trying to talk up the market. Property is overpriced, and there are less buyers, that's hardly surprising. The Marbella scandal, demolition of illegal builds, land grabs in Valencia, corrupt officials everywhere, none of which is going to inspire confidence in any prospective purchaser. I would say they have a huge job on their hands to inspire any confidence in the market. Over here we used to see a lot of presentations in hotels of property in Spain, and although they still do it, there are lots of other countries like Turkey, Bulgaria, Romania cropping up now. I think a lot are voting with their feet. I love the Spanish culture, the language etc, but the vast majority aren't worried about that, they just want somewhere cheap, sunny, and with easy low cost access, and unfortunately for Spain, these places are becoming more and more available. I certainly wouldn't ever fancy the likes of Bulgaria, but people see it as an expanding market and are keen to invest. Spain will always hold an attraction for many, but I think it's best years are past.
The following is quoted from the internet, it's simply unsustainable

More than 800 000 building permits are issued this year in Spain – the number greater than for the UK, Germany and France together. This is record breaking statistic, even for Spain with the years of rapid overbuilding, which worries the experts. The economists warn that the building rate is too high, even risky for investment.
Regards, Frank

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Postby katy » Mon Sep 03, 2007 7:04 pm

A spanish rule of thumb....houses are selling like hot cakes where the poster lives :roll:

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Postby gus » Mon Sep 03, 2007 7:19 pm

I find it difficult to get all "excited" about house prices, whether they are going up or down.

At the end of the day, if you want a particular property you will pay what YOU think it is worth - if it is "over-priced" to you then don't buy it.

The people who are "squealing" are those who sought to invest in property, usually off-plan, in the expectation that they could earn a few bob quickly. Property, like shares, can go down as well as up in value. If you want to keep your money safe then put it on deposit - if you want to get a higher rate of return then you have to accept the risks.

We bought a property in Spain and it was off-plan (mind you the basic structure was there). The difference was.......we knew exactly what we wanted and where we wanted it......and we achieved that. We are now very happy with our house and have no interest whatsoever in the current "value". Having said that, it is not a classic 2-bed apartment :-)

Gus

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Postby Paula » Mon Sep 03, 2007 9:39 pm

Well I am about to put an apartment on the market within a month or so. Sold two pretty quickly at the beginning of the year, so will be keeping my fingers crossed with this one. Hoping I don't find I still have it a year down the line. Do really wish it was in the UK, just sold a house where the 5 people in the chain each sold their respective properties within a timescale of 2 to 12 days!!!

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Postby katy » Mon Sep 03, 2007 9:49 pm

Paula, no-one on A.com seems to have a problem selling. It's just people not on the forum who haven't sold for months/years :wink:

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Postby Paula » Mon Sep 03, 2007 10:25 pm

Lucky I am an A.com member then :wink: Still wish it was in the UK, would feel far more confident about getting my money in a reasonable timescale.

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Postby MarkF » Tue Sep 04, 2007 8:39 am

katy wrote:A spanish rule of thumb....houses are selling like hot cakes where the poster lives :roll:
:lol:

I don't get this Bulgaria/Turkey/Romania thing, I can think of a lot of sensible reasons not to buy a proprty there and but not many reasons to.

If people have had their fingers burnt in Spain just watch what happens (has happened ) to the poor buggers who have bought into a really daft dream.

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Postby frank » Tue Sep 04, 2007 9:04 am

Personally, I would not think of investing there, but I don't see a huge difference from Spain, maybe 30 or so years ago. If you read about these areas, land prices are rising quickly, property is definitely on the up, and whilst it might not appeal to us, property is selling well. I was reading about the golf courses built,very few at the moment, but loads more planned, does that sound familiar? :D Could be a case of fortune favouring the brave, those that get in early, could make a killing. Not everyone has a fortune to spend on property, and whereas Spanish property prices have doubled in 5 years, prices in these other countries are attractive to first time buyers of a second home.

Research by mortgage lender Halifax found the cost of a Spanish home had doubled between 2001 and the end of 2006, leaping by 57% in the past two years alone.
http://money.guardian.co.uk/houseprices ... 22,00.html
Regards, Frank

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Postby MarkF » Tue Sep 04, 2007 10:17 am

Good points Frank, I might be wrong and often am. But it is a lot easier for a Brit to adapt to life in Spain than any of those three countries, learning some Spanish was relatively quick and painless even for a dunce like me, but learning Bulgarian? :shock:

There is also just too much either religious or governmental instability for me to consider investing money there. Maybe you are right and fortune will favour the brave.

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Postby katy » Tue Sep 04, 2007 10:37 am

The problem with the "emerging markets" (EA speak) is that they have started where Spain is at now ie. full of corruption and mainly building ugly blocks. It took 30 years for Spain to get to this stage. Bulgaria is selling (mainly to Brits) because it is cheap, only about 4 weeks rental per year and virtually no resale market. From the things I have heard about most of these places they make Benidorm seem classy and smart :)

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Postby Beachcomber » Tue Sep 04, 2007 10:48 am

katy wrote:A spanish rule of thumb....houses are selling like hot cakes where the poster lives :roll:
That's probably because no-one lives on an off-plan ghost urbanisation.

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Postby alaninspain » Tue Sep 04, 2007 1:17 pm

Having known the commission rates or mark ups set by estate agents in Spain, am I alone in not feeling too sorry for them?

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Postby jwc » Tue Sep 04, 2007 5:44 pm

Certainly not alone, just another branch of timeshare salesmen.

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Postby frank » Wed Sep 05, 2007 6:15 pm

España será un gran geriátrico vacacional; Dubai, el nuevo referente para los jóvenes
Hablo de un turismo de extranjeros de avanzada edad que compran apartamentos para venirse a morir aquí.

I was just reading an article, in El Pais, about how this guy thinks Spain will become a holiday spot for geriatrics, and about how elderly foreigners buy apartments here, and come here to die, whilst the youngsters now prefer new places like Dubai. :D Ring any bells?

http://www.elpais.com/articulo/revista/ ... irdv_1/Tes
Regards, Frank

No soy residente, simplemente un turista, ¿qué sé yo?

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Postby gus » Wed Sep 05, 2007 7:01 pm

I'm not sure I'd class myself as geriatric - yet!! - but I come to Spain because I am comfortable with the location, the weather, the culture and the food.

Mind you, if this means that the younger "yobs" decide to visit Dubai instead then I am sure I will be even more comfortable.

Gus

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Postby frank » Thu Sep 06, 2007 8:58 pm

Think you're out of luck, I think the yobs will still come to the CDS with all it's Brit bars and food, the more discerning younger tourist will be heading for Dubai. :D So long as you keep them all down there on that coastal strip, that'll be fine, no chance of me bumping into them. :D
Regards, Frank

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Postby gus » Thu Sep 06, 2007 9:38 pm

Frank.

I tend to stick to the Los Boliches/Torreblanca end of town...........the bulk of my contact is as they move out to the pubs and clubs of Fuengirola......... and I wish them a pleasant evening :-)

I'm usually back on my roof terrace long before they think about returning.

Gus

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Postby katy » Thu Sep 06, 2007 10:15 pm

I have been to Dubai :shock: smart hotels and then..nothing it is a *beep* tip outside. Lots of Brits being conned too. Should see the million pound homes (all overlooking one another!) and of course (if you read the daily Telegraph) they are now worth 2 million. Seems like the whole place is a ghost town of empty properties. The CDS is having a respite from the yobs except in some of the usual areas, they are all going inland for el cheapo where they have opened Brit bars and have lots of car boot sales (whilst integrating with the locals) :roll:


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