Property Report December
Property is coming back into favour with European investors, understandably still wary of re-investing in stock markets, says Peter Cluskey.
It’s Christmas time and one shouldn’t be unduly glum. So despite the fact that the western world is sliding inexorably into a recession fuelled by the collapse of global banking, here’s one crumb of seasonal cheer – the stock market is so shot-to-pieces that even property is starting to look attractive again.
The simple fact is that investors around the world have lost so much faith in their banks and in the financial system as a whole that they’d almost consider doing what they’d have scoffed at another, less-affluent, generation for suggesting: hiding their money – or what’s left of it – under the mattress.
Such is the confusion over where to find a safe financial haven that The Times of London ran this headline recently: “Frightened Investors Pile Into Property” – a suggestion which seems little short of surreal given that it was an over-inflated property market, combined with poor-quality mortgages repackaged as financial derivatives, which got us into this colossal mess in the first place.
And yet there it is: the panic of September and October may have eased, but confidence has been severely damaged – so as Christmas approaches, bricks and mortar are once again in the ascendant as the investment-of-choice for those who’ve still got a few euros burning a hole in their pocket.
As a result, could it be that Mallorca may manage to sidestep the worst of the property downturn after all – and see British, German and other European buyers back tentatively on the real estate trail in Spring 2009?
“We were hoping that the fact that there’s always demand for more expensive properties would see us through the worst of 2009, given that recession in the UK and Spain has been forecast for some time now”, one international real estate agent who knows the Balearics well, told ABC Mallorca.
“But now perhaps there is a little more reason for cautions optimism this Christmas … just perhaps. And if the fact that banks throughout Europe have been financially underpinned by their governments leads to some renewed activity in the mortgage markets as well, so much the better.”
Despite the bursting of the property bubble on the Spanish mainland, it’s only fair to point out too that Spanish banks have not been as badly hit by the sub-prime debacle as their counterparts around Europe. Finance Minister, Pedro Solbes, has given an assurance that the broader economy is not in danger, and Banco Santander is now the largest bank in the eurozone. All of which is good for Spain – and thus Mallorca – in terms of business sentiment.
In the UK, the consensus certainly is that cash buyers are back on the property-investment trail – though without their bankers with them – and that too has got to be good news for Mallorca.
“We are already seeing a huge amount of interest from investors – mainly because they believe that bricks and mortar are safer than banks and stocks and shares in the current climate”, confirms Liam Bailey, Head of Residential Research at Knight Frank.
Mark Dampier, Head of Research at the independent financial advisors, Hargreaves Lansdown, agrees. “With property, you can feel it, touch it, see it and live in it – so there’s a certain logic to buying now if you have the money and can get a bargain, rather than depositing in banks.”
Robert Bilson of Savills puts it even more colourfully: “There are people with £50,000 who would rather buy a derelict house now and board it up for a while than put their savings in the bank.”
In Germany, the fear of recession is as great as in the UK. Growth forecasts have been slashed from 1.4 percent to just 0.2 percent, with suggestions that there could be 400,000 job losses during 2009 as a direct result of that weaker growth. That won’t play well with middle-class Germans’ natural conservatism as investors – though those with money to spend may well be on the lookout for bargains too.
So is the Mallorca market offering any bargains this Christmas that are too good to ignore? Well, if you’re like two of this island’s best-known celebrity residents, Michael Douglas and Catherine Zeta Jones and can’t bear to spend a day away from the golf course, Engel & Völkers – www.engelvoelkers.com – have the perfect Christmas present for you.
Just a few minutes from the Royal Golf Course in Bendinat, they have a luxury three-bedroom villa with stunning sea views on the market for €3.9 million. Work is due to start soon to give it an extra touch of luxury with a jacuzzi and a guest apartment, so by the time you buy it, it will be even more attractive – which certainly hasn’t been true of shares over the past 12 months.
Golf fanatics will also love a beautiful private villa in Santa Ponsa, for sale with Andrews and Associates – www.malcolmandrews.com – for €3.5 million. This property is just 200 metres from Santa Ponsa golf course, with the possibility of direct access to the twelfth or thirteenth tee. Santa Ponsa Country Club is just 600 metres – and the village, beach and yachting marina are all less than one kilometre.
If you’re trying to keep the price of your Christmas presents in or around €1 million, to mark the economic downturn, then Imperial Properties – www.imperial-properties.com – have an immaculate 210-square-metre three-bedroom two-bathroom for sale at Costa de la Calma in Calvià for €1.1 million, which should get you in comfortably under £1 million sterling. It has a private pool and garden, with panoramic views over the mountains.
And if you’re looking for a real Christmas bijou, the perfect Mallorca hideaway, BCK Luxury Properties – www.back-properties.com – has a perfect 83-square-metre two-bed apartment at Silver Point, overlooking the yachting marina at Portals Nous. It’s fully-furnished, with a pool and every luxury from marble floors to its own elevator. Price? Just €845,000. The letter should start: Dear Santa …
