Business Over Tapas 28 January 2016 Nº 145

28 Enero 2016  Sección; Especiales 1095 votos

Editorial:

There are, for the purposes of this editorial, two types of property, or, as the slightly archaic word has it, dwellings. Those that are preferred by expatriates, or holiday-home owners, such as beachfront homes, apartments in urbanisations, farmhouses, village homes and so on, based around the relatively unimportant towns of Estepona, Marbella, Mijas, Mojácar, Altea, Jávea, Rosas, certain Island villages and many other delightful resorts and towns located near the coast (the comfortable equivalent, in British terms, of owning property in Middle Wallop or Henley on Thames) and, in the other corner, the rather larger market which is the apartments that makes up and surround Spain’s cities. How many expatriates live in high-rise blocks situated on the edge of Burgos, or Cuenca, or indeed Madrid? Spanish indicators, such as Tinsa, or the information from the notaries, are skewed understandably towards this second type of property. But perhaps demand and growth go more or less hand in hand. There are both the bad times and the good times.

However, perhaps a ‘bad time’ is coming for the expat market. We simply don’t know what might happen if the British people decided to leave Europe in the referendum, which might be held this year, or if not, in 2017. If they left – if ‘Brexit’ came to pass – together with a messy combination of anti-foreign legislation in London, a populist government in Spain, political confusion about Gibraltar and some simply bad choices from ‘the top’, we might find that the first kind of property, as mentioned above, would experience a sharp drop in value following a partial exodus of British citizens from Spain: a drop which would be felt by all expatriates, not just the British ones. For those of us who live in this beautiful country, that might not necessarily be a problem, but for those considering buying here, it could be a reason to wait for another year, or to rent, or to just pay a deposit. Only to be ‘safe’, that’s to say, because we just don’t know what is going to happen: all we know is that there is no one out there to argue our case.

 

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Housing:

Cheery news from Ibiza: ‘International demand for property in Ibiza, Spain, is set to “explode” over the next five years, says a leading Spanish agent. Regional directors at leading independent real estate agency, Lucas Fox International Properties, predict that 2016 is likely to be a positive one for the country’s real estate sector, following several years of downturns. But now the market recovery is well underway and gaining momentum, local buyers are returning to the market, unemployment continues to fall and the economy is set to be the fastest growing of the “Big Four” euro economies over the next two years, according to the International Monetary Fund..’. Found at OPP Today.

From Eye on Spain: ‘Spanish property is undervalued by 26%. According to the Organisation for Economic Development (OECD), property prices in Spain are undervalued by 26%, whilst prices in the United Kingdom are 7% overvalued. The research by the OECD has been running for the last decade and examines property prices against wages in each country. It then compares this against the long term average for each country...’.

The Diario Sur reports that the east Málaga home-owners association SOHA (Save Our Homes Axarchía) intends to take their cause – their homes, built and paid for in good faith, were afterwards ruled as ‘illegal’ – to the United Nations. The SOHA page is here.

In an article called ‘Owners of tourist apartments at risk of exploitation’, the ‘Canaries story’, reported in the BoT last week, appears in some detail at Mark Stücklin’s Spanish Property Insight following a local decree which ‘...prevents owners of tourist apartments (apartamentos turísticos) and bungalows in some tourist complexes from enjoying their own homes for personal use, and forces them to cede the rental management to one operator for the whole complex. Owners who refuse can be forced to sell to the operator at a price determined by the latter, and also face fines of up to €300,000...’.

‘Spain's Banco Popular is considering selling up to 8 billion euros worth of real estate assets in 2016 to reshape its balance sheet, a source familiar with the matter said on Wednesday. The Popular, Spain's seventh-largest bank by market value, is the most exposed to the property sector of any listed Spanish lender...’. Found at ETRealty.com

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Tourism:

Hotel prices are well up these days, says El País, with the average charge at almost 79 euros for a room, up nine euros over 2010 tariffs. 308 million people slept in a hotel in Spain in 2015. The cheapest hotels are in Castilla-La Mancha, with the average price of 54€ per room (figures from the always reliable INE).

From Molly: ‘The 36th edition of FITUR Madrid held from 20th -24th January 2016. This travel and tourism fair is one of the largest fairs in the sector. This major trade fair highlights the contribution of Travel Bloggers with the FITUR #Travelblogger award. The 2016 award for Best Content was presented to Molly Sears-Piccavey in Madrid on Saturday 23rd January. Piccavey.com was selected by an external panel of experts in the industry. The blog was chosen for its quality, the frequency of publication and the innovate use of content. Molly Sears-Piccavey from Nottingham, UK has been living in Spain since 1998. The blog shares tips and experiences on expat life and travel around Spain. As a bilingual speaker she is immersed in Spanish culture and has a real passion for travel’. Our Congratulations.

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Finance:

So, what with all of this political uncertainty, has foreign investment in Spain fallen? No, says El Diario. The gloomy news put out in the mainstream press is more to do with scoring political points, and preserving the option for a government with the Partido Popular.

‘Things are not looking good for Grupo Actividades de Construccion y Servicios SA (ACS), the world’s biggest international contractor...’. From Wolf Street.

From Typically Spanish: ‘Brussels has alerted that the elevated public debt in Spain will require ‘a significant fiscal adjustment’. The report ‘2015 on Fiscal Sustainability’ published on Monday considers the Spanish economy is showing ‘vulnerability’ for the high debt. The European Commission estimates there is a 40% chance of the public debt being higher in 2020 than last year; and could reach a maximum of 101% of GDP this year and 100% next...’.

In the first half of 2015, Spain exported armaments to Venezuela (13 million euros), Saudi Arabia (447.6 million euros), Egypt (over 100 million euros) and to Iraq (37.4 million euros), says Nueva Tribuna here. A fuller list, for 2014, from El Huff Post, here.

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Politics:

One of the most remarkable laws in Spain (and another good reason why we need a new government) is the 'decreto de autoconsumo', better known as the 'Sun Tax', which puts all and any inconvenience in front of solar panels, and any other alternate energy used privately to cut in any small way the profits demanded by the power companies. In Spain, solar energy is a 'slam dunk', but you won't find it being used by householders as the threat of massive fines for improper use make it more or less impossible, short of going entirely 'off the net'. Podemos - the party that wants to stamp out corruption in Spain - has proposed a bill in Parliament to repeal this law, removing 'all administrative or economic obstacles and techniques to the orderly consumption of electricity that have no justification'. We look forward to hearing the arguments in favour of the Sun Tax as proposed by the acting Minister of Energy José Manuel Soria.

As the Left dukes it out, so too, does the Right. El País reports that Rajoy and the leader of Ciudadanos, Albert Rivera, are in discussion to see what might be done to form a government. Unfortunately for them, the best route would appear to be with the PSOE as a partner. However, Telecinco says that Felipe Gonzalez is in favour of a PP/Ciudadanos coalition minority Government, with the PSOE abstaining! Better than going in with Podemos, he claims.

Propaganda, lies and misstatements seem to sum up the ‘Establishment’s’ actions against a possible pact between Podemos and the PSOE, says El Diario here and here. We have certainly seen some good ’uns, including endless Podemos links to Iran, Venezuela and the ETA, and culminating in a tweet from a PP deputy showing Podemos women relieving themselves outside the Amudena Cathedral (turns out, it was a photo about an unrelated Argentinean protest in Buenos Aires).

El Huff Post has a list of possible successors to Mariano Rajoy. These are Soraya Sáenz de Santamaría, José Manuel García-Margallo, Alberto Núñez Feijóo (our favourite), Alfonso Alonso, Cristina Cifuentes and María Dolores de Cospedal.

The Nobel Prize for Economy Joseph Stiglitz doesn’t mince his words: ‘What they’ve done to the Spanish is a disaster’. ‘With the politics of austerity’, he says, ‘whole families have been broken asunder’, he claimed at the Economic Forum in Davos last week. Story here.

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Corruption:

 

The Guardia Civil arrested on Tuesday the man who was once president of the Valancia ‘diputación’ (county council) and president of the provincial Partido Popular, Alfonso Rus, in his home, as part of the investigation into the Caso Imelsa. A search was also made within the offices of Rus’ building company in Játiva, Valencia. Further searches were made in several other locations, including the offices of the PP sponsored Ciegsa, which builds schools and is alleged to have misspent millions of euros of public funds. El País reports twenty four arrests, of which eight are PP politicians (14 had been released by Thursday morning, pending further investigation). Here we see a video of Rus saying ‘The communists who shopped me will be blown up’ (Translation... ‘strung up’, maybe). Yo Me Tiro al Monte says that the police have also blocked 252 bank accounts and confiscated 150 high-price cars. Lastly, an embarrassing few moments on a video: ‘I love you Alfonso (Rus), I love you, you bastard – your success is my success!’. Mariano Rajoy in a June 2007 public meeting.

The big fish in the Valencia pond, now in the Senate in Madrid and protected by immunity, is Rita Barberá. Two articles here ask: can she be interrogated? ‘Rita, now we must talk about you’ from El Ventano and ‘Would Rita Barberá be arrested if she wasn’t protected by the laws of immunity?’ – at La Sexta (video report). El País in English explains the aforamiento ‘immunity’ laws here.

El País has the names of some senior political figures entwined in the Acuamed scandal. It also reports that 40 million euros were paid irregularly to the builder in connection with an incident at the desalination plant in Cuevas, Almería, in 2012. La Ser runs a story saying that the ex-Minister for Agriculture and current European Commissar Miguel Arias Cañete knew about the Cuevas ‘extra payment’ to a building company. Arias Cañete denies any connection with the Acuamed scandal. Cuatro also has the story.

There are three Acuamed plants in Almería, and Almería Hoy claims that the over-cost on the construction of these three was in the order of 200 million euros. The PP deputy and spokesman for his party Rafael Hernando blames the previous PSOE administration for the situation.

The Partido Popular – the entire party! – has been indicted (the new word in Spanish is ‘investigado’) over the destruction of the hard drives on the ex-treasurer Luis Bárcenas computers. And who made the complaint? Luis Bárcenas himself! The PP had told Judge Pablo Ruz that the computers had been rendered useless back in 2013. More at Cadena Ser. A journalist called Iñaki Gabilondo asks of the PP on video here, ‘...they talk of ‘isolated cases of corruption’. But how many isolated cases must there be, before they are no longer ‘isolated cases’?’

‘The Supreme Court has demanded Bankia repay two small buyers in a ruling that could pave the way for thousands more to lodge claims. The ruling was made following ‘serious inaccuracies’ in leaflets advertising the bank’s stock market launch in 2011. The two investors ploughed in €9,997 and €20,868 to the bank, which received the bulk of a €22 billion government bailout in 2012. The move means thousands of customers who bought the preferred shares could be in line for compensation...’. From The Olive Press.

Spain is in 36th place in the Corruption Perceptions Index 2015, with 58 out of 100 points. The scores were released on Wednesday by Transparency International here. El Mundo comments on the ‘results’ here.

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Catalonia:

In Barcelona, the Mayoress is Ada Colau, who has become something of a celebrity in Spanish politics – perhaps even the acceptable face of the anti-establishment Podemos and their imitations. Colau, who comes from a local party called Barcelona en Comú, which joined a group of other small parties under the name of En Comú Podem, wants to start a new major left-wing party in Catalonia with ‘no more coalitions or jungles of letters’, she says. Story in El País.

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Waste:

 

From a site called Hartos – A list of things that cost more than they’re worth:

 

1. Centre for the Creation of the Arts in Alcorcón (CREAA). 90 million euros so far. Unfinished and work stopped.

2. Setas de la Encarnación (a park) in Seville. 102 million euros.

3. The tram system in Parla, Madrid. 255 million euros, 134 cost with the rest in interest payments.

4. Castellón airport. 170 million euros. Unused.

5. Caja Mágica (multiuse tennis stadium) in Madrid. 300 million euros.

6. City of Culture in Galicia. Over 300 million euros. Finished as a smaller project

7. Palacio de Congresos Ciudad de Oviedo. Over 360 million euros.

8. Terra Mítica, Benidorm. 400 million euros. Sold for 65.

9. Reform of the Palacio de Cibeles, the new town hall of Madrid. 500 million.

10. Ciudad Real airport. 1,000 million euros. For sale.

11. City of the Arts and Sciences, Valencia. 1,102 million euros. 20 times the cost of a mission to Mars.

Those expensive court cases against malefactors in Seville. The first people to be impugned in the ERE investigation are now close to having all charges dropped, since time has run out. ABC says that a number of businessmen, responsible (allegedly) for misappropriating 855 million euros over ten years ago, will soon be able to breathe freely again.

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Brexit :

 

Goldman Sachs makes large donation to anti-Brexit campaign. Bank donates six-figure sum to the campaign to keep Britain in the EU amid fears of economic disruption. U.S. investment bank Goldman Sachs donated ‘hundreds of thousands of pounds’ to the British campaign for staying in the European Union, according to media reports. The move reflects concern among executives on Wall Street about the disruptive impact a ‘Brexit’ could have on the global economy...’. Found at Politico.

An interview with Noam Chomsky: ‘Is European integration unravelling?’ From Truthout.

From the Heute Show on ZDF, the Germans have some fun with the British exit from the EU. (German with English subtitles).

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Various:

According to the always reliable INE, the statistics agency, the number of foreigners living in Spain is falling. The padrón, the town hall register that is often avoided by Northern Europeans, particularly the British, who say they ‘want to keep off the radar’, for January shows a drop over last year of some 300,000 to around 4,720,000. There are (apparently) 282,120 Britons living in Spain and 130,505 Germans. El País has the story. The problem is - the Spanish believe all this as Gospel (The Independent says that there 'could be as many as 800,000 Britons living in Spain’. April 2015).

Bullfighting is getting bad press, it appears – and a new platform to promote the spectacle is being set up by supporters of La Tauromaquia. Details remain sketchy, but the ABC enthuses nonetheless... Bad press indeed – as a bullfighter poses with both a bull and his five month old baby daughter. The ‘Defensor del Minor de Andalucía’ has opened a case against Fran Rivera as other bullfighters pose with similar photographs in solidarity.

It’s one thing when evildoers make their own forged currency – it’s one way of making money, after all – but quite another when the State makes its own tin coins. This apparently happened in Spain at the end of the XIX Century as the economy was in tatters. In those times, coins had to be made of their approximate value in metal. Gold was in short supply, so major coins were minted in silver, worth at the time more or less their face value, including the five peseta ‘duro’. The price of silver was however falling, which was good news for the coin-making Government, which was able, briefly, to show a profit on its minting. Soon the public became aware that their coins held less than half their real value, so counterfeiters started making real fake coins, since they were worth relatively little to produce. One such dodgy coin-maker was arrested in Seville, giving rise to the Spanish expression to be as false as a Seville shilling – ‘más falso que un duro sevillano’. Indeed, false coins became known in Spain as ‘sevillanos’. Alarmingly, even the Banco de España couldn’t tell the real coins from the fake ones and, in 1899, Spain stopped producing silver duros. In 1908, the coins were recalled (around 1500 million of them, including an estimated 400 million false ones). The story is told at Memento Mori.

Unemployment rates, by country. ‘A reminder of which European economies have inflexible labour markets’. A graphic from Paul Kirby shows Spain as way below the OECD average of 6.7%. Spain runs at 21.8% - and Andalucía, not shown on the graphic, runs at 31.7% (here).

‘Cochineal fly is perfect for killing off an invasive plant’, says the headline for a back-copy of Quercus, the environmentalist magazine. So scientists introduced the fly into prickly pear plants (chumbo), in Castellón two years ago. Another source says that the fly was bred in Tenerife as long ago as 1825, to harvest the cochineal colour for food and clothes-dying. The fly is now lose across southern Spain and has been highly successful at its primary function, determinedly destroying the landscapes across Murcia, Almería, Granada and now Cádiz. The ‘invasive cactus’, by the way, was brought back to Spain by Christopher Columbus, some five hundred years ago. The fruit (higo chumbo or tuno) is used for eating and is also distilled as a type of brandy. A useful guide to the chumbo comes from an article from Murcia dated 2011. A local hunter tells BoT that the fly is spread by birdlife! Meanwhile, Equo, an environmentalist political party, lays the blame for the cochineal fly tragedy at the doors of the town halls (!). They say the public has not been told how to deal with ‘the plague’. The ecologists helpfully add that you should wash the plants with a high-pressure jet of soapy water every few weeks. Probably does wonders for the fruit, as well.

From Orgullosos de Jaén, the biggest man-made forest in the world is the 64 million olive trees growing in Jaén: half a million hectares of them.

The cost of tap water varies from city to city, with some customers paying as much as 350% more than others – an annual difference says Facua, the consumers association, of over 450 euros. Murcia followed by Barcelona are the most expensive, Valladolid is the cheapest. The report is published in El País here.

A company called ‘Destrucción Confidencial de Documentación’ reports a brisk trade in their shredding of documents service as certain ministries worry about an imminent change of masters. El Espía en el Congreso reveals all.

Cola Cao or Nesquik? Twenty Spanish chefs declare for their favourite chocolate (Video here). You can vote too!

Thieves have stolen the famous first century Medusa mosaic centrepiece of the Villa Romana del Río Verde in Marbella. Story here. The Villa Romana in English.

From The Local: ‘US taxes and FATCA: 'The time for hiding is over'. Since July 2014, the five-letter acronym has instilled dread in the hearts of American expats all around the world...’..

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See Spain

 

From The Local: ‘Nine charming Spanish towns to visit before the tourists come. Nine Spanish towns have just been added to the prestigious list of the "most beautiful towns in Spain". So get your skates on and check them out before the hordes of tourists descend...’.

Pals, a beautiful medieval town in Catalonia. Story and pictures here.

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Deflation

by Andrew Brociner

As we have seen in a few issues, there is a deflationary phenomenon in Europe and periodically, we check its current state.

The period of declining prices in Spain has continued for over two years, with negative values of inflation being registered in almost every month for over a year now. This trend is not really showing any signs of reversing for the time being. Price inflation in Spain is consistently below the European average and one of the lowest in Europe, along with Greece and Bulgaria. But Greece has recently improved its inflation numbers and is now in a better position than Spain.

                                                   

The ECB has a mandate to maintain inflation around the 2% level, deviations below this causing lower inflationary expectations and thereby putting off purchases. The European average over the last year has been slightly less than zero. The Central Bank is well aware too that any prolonged period of deflation, such as we have been witnessing recently, could, by expectations feeding onto themselves, produce a downward spiral on prices as took place in Japan for a very long time and with no effective remedy as all attempts to boost prices there had no effect.

With this in mind and to avoid this scenario, the ECB has been in expansionary monetary policy mode and is likely to remain there for the foreseeable future. And with the inflation data coming in, the picture is not really getting much better. While there seemed to be some signs of improvement last year, prices then started declining again. So, clearly, we are not out of the situation yet.

Prices continue to be low notwithstanding the depreciation of the euro against the dollar, from 1,4 in May 2014 to its current rate of less than 1,1 – which makes imports higher priced and increases the overall inflation level. In addition, the oil price has been tumbling tremendously recently and this has impinged on the downward trend in prices. As the inflation numbers for Europe still remain around zero, the ECB might find itself under renewed pressure not only to extend, but also to boost its current quantitative easing programme. As Draghi has stated, the programme will be reviewed in March. Therefore, given the data, we can expect more quantitative easing and low interest rates for some time to come.

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Finally:

Enrique Iglesias and Juan Luis Guerra perform ‘Cuando Me Enamoro’ on YouTube here.

Oh, and Chuck sent us this! Heh!

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Business Over Tapas

A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners:

with Lenox Napier and Andrew Brociner

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