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Spanish national and property news round-up week ending April 17th
At last, a buyer for Ciudad Real airport!
While of course the political uncertainty in Spain has continued to occupy many of the headlines over the last seven days, it can be reported this week for once that the issue has not been as overwhelmingly dominant as on other occasions, having to compete for column inches with terrorism, tragedy, corruption, sport and numerous other items.
On the political front no visible progress has been made during the week in the efforts to form a working parliamentary majority, and the fact that the deadline for doing so is drawing ever closer was brought home on Tuesday by the announcement that King Felipe VI will hold a further round of meetings with representatives of the main parties on 25th and 26th April to ascertain whether another presidential investiture debate will be called. This effectively means that if no candidate is proposed by then, the nation will go back to the polls exactly two months later, despite a group of 100 “intellectuals” from the fields of culture, politics and other walks of life adding their voices to those urging a compromise agreement.
A rash of new corruption cases breaks out
Should a new election be called, then it has to be said that the ruling PP party has not had a good week of pre-campaigning, having been hit by a series of new corruption issues. On Friday José Manuel Soria, the Minister for Industry, Energy and Tourism in the current caretaker government, resigned from his post following a series of reputation-damaging revelations over the last ten days regarding companies and accounts in his name in tax havens.
The problems began for Sr Soria when his name appeared in relation to the infamous Panama Papers, and the situation became more complicated during this week when evidence was provided to show that he and his brother owned interests in the “fiscal paradise” of Jersey and an offshore company in the Bahamas. As the week progressed his declarations in public became increasingly contradictory, in the end his position was clearly untenable. Hie position will be filled temporarily by Luis de Guindos, currently in charge of finances, until a new government is formed, as mentioned above, probably following a second General Election.
The PP are being reported as distancing themselves from the former Minister, "only Rajoy called me" Soria has said in the national media over the weekend.
More scandal surrounded José Torres Hurtado, the PP Mayor of Granada, who is under intense pressure to follow Sr Soria’s example and resign following the announcement this week that he had been arrested for alleged corrupt practices regarding urban developments in the city. Sr Torres Hurtado is among sixteen people who are officially under investigation by the courts for possible offences of fraud, bribery, misuse of public funds and influence trafficking among others, and as a result he and Isabel Nieto, the councilor at the head of the Department of Urbanismo in the Town Hall, have both been suspended temporarily from the PP party they represent.
However, the Mayor is refusing to resign, maintaining that he is fully innocent of all charges and that he has “no idea” of why he is being accused of any wrongdoing.
Similar pressure has so far been resisted by Senator Rita Barberá, the former Mayoress of Valencia, who this week appeared in court in Palma de Mallorca as part of the Nóos Case trial. On this occasion Sra Barberá was not appearing as one of the accused but was required to give evidence relating to the payment of 3 million euros to the Instituto Nóos for organizing the three “Valencia Summit” events in 2004, 2005 and 2006: however, she may have been making the first of many court appearances as investigations continue into the allegations of systematic corruption in the Town Hall during her time in office.
At least one high-profile corruption case this week did not involve leading figures in the PP, though. This was the one regarding Mario Conde, the former head of the Banesto bank who was sentenced to 20 years in prison in the early years of this century for corrupt practices and was re-arrested on Monday morning by the Guardia Civil.
Sr Conde, who was named last year as being second on the list of individuals who owe most money to the Spanish tax authorities (just under ten million euros), was detained along with his two children for having brought 13 million euros back into Spain from Switzerland and the UK, and it is believed that much of this amount relates to some of the “missing” Banesto funds from his time as managing director of the bank.
Economic news and tourism
Despite all these distractions and the political impasse, however, there is a general feeling of optimism amongst the business sector that the Spanish economy is on the road to recovery and this week official statistics showed that the number of new companies registered during February was 10,399, an increase of 19.4% compared to the same month in 2015 and the highest single monthly total since April 2008, at the start of the long slump. This is the fourth consecutive year-on-year increase, and it appears to indicate that there is growing confidence among entrepreneurs that their businesses can survive and thrive in the current economic climate in Spain.
In addition, the tourism and travel sector appears to be thriving, with the latest airport passenger data showing a 14% increase in the number of people flying to and from Spanish airports. This bolsters expectations that 2016 will be another record year for the tourist industry which has been one of the catalysts in the recovery, and could mean a further significant reduction in unemployment figures during the summer.
But not everyone is happy with the rise in mass tourism: in Palma de Mallorca the Policía Local have begun an investigation into a series of graffiti messages which have appeared on the walls of various buildings in the historic quarter of the city targeting tourism despite it being one of the most important revenue-generating activities on the island.
11.3 million foreign tourists chose the Balearics as their destination in 2015, spending more than 11 billion euros in the islands during the year, but the message of the graffiti is that tourism is destroying the city. Although the Mayor disagrees strongly, recognizing that the island would collapse without tourist income, clearly not everyone in Mallorca feels that the benefits of millions of visitors from abroad are evenly shared.
If the Brexit poll does not harm the increased British tourist figures in Spain, though – and this is a real worry - it seems improbable that a few Palma graffiti artists will bring visitors numbers down.
One area of industry to suffer a difficult week was the tobacco sector, with 50,000 cigarette machines being switched off all over Spain in protest against regulations which prohibit tobacco companies from investing in vending machines, and fine operators who provide the tobacco companies with information regarding brand-by-brand sales should be lifted. There are approximately 150,000 cigarette vending machines in Spain, but the fear is that unless steps are taken to protect them as many as 40,000 could disappear, and this week the machines which were switched off bore stickers explaining the situation in an effort to gain support from frustrated smokers.
However, this week Spanish government deficit continued to hit record levels, and the government is pressuring the autonomous communities to reduce their expenditure at a local level. Naturally, this is something most will be reluctant to do, given the increasing likelihood of a second General Election, unpopular austerity measures a contributing factor to many long-established councils losing their control during the previous sets of regional and municipal elections last year.
On Saturday Spain's acting Economy Minister, Luis de Guindos on Saturday, cut the country's economic growth forecast for this year and next, blaming a global economic slowdown.
De Guindos, who was in Washington for a meeting of the International Monetary Fund, cut the forecast growth in national output for 2016 to 2.7 percent from 3 percent and the 2017 forecast to 2.4 percent from 2.7 percent.
Earlier this week the IMF reduced its growth forecast for Spain for the first time since 2013, to 2.6 percent from 2.7 percent. It also cut its global growth forecast for 2016 for the fourth time in the past 12 months.
Those who have been following the sagas of the various private airports in Spain might be interested to know that at last the Ciudad Real airport which was intended to give an alternative landing point “close” to Madrid has been sold. On Friday the courts announced that after a number of failed bids, the ambitious privately built 450 million euro airport had been sold for 56 million. At one point last year the courts were forced to accept a 10,000 euro bid from a Chinese investor who was the only bidder, but fortunately for those liquidating the assets of the company who built it, the deposit has been physically handed over and it looks as though this sale may finally go through.
Terrorism and ETA
Unfortunately it’s hard to keep terrorism out of the news these days, and on Tuesday the province of Málaga took centre stage when the police arrested a French national believed to have supplied the arms used by an Islamist militant to kill four people at a kosher supermarket and a policewoman in Paris in January 2015.
Before he carried out the attacks, Amed Coulibaly is known to have spent time in Spain with his wife and an unknown third person, and the likelihood is that more links with the Jihadist cause will continue to emerge in Spain. This is because the Moslem population in this country is close to 2 million and rising, and although very few of them hold radical views, let alone advocating violent struggle, extremist ideas are more likely to prosper in the commercial or residential properties which have been adapted for religious purposes. In the whole of Spain there are only twelve actual mosques, despite the number of people who profess the Islamist faith having increased by as many as 300,000 over the last five years.
Elsewhere, a couple were arrested in Algeciras for links to Islamic State on Saturday as they were attempting to leave Spain after the man's brother had blown himself up in a suicide bomb attack, amd thirteen people were arrested throughout Spain on charges of using social networks to promote or glorify terrorism and humiliate the victims. This offence can of course be related to Jihadism but in this country often has connections with the activities of the Basque separatist terror group ETA. Every trial or release of a member of ETA appears to provoke a new spate of social network activity, and although the group is still respecting a ceasefire it is still technically active.
This weekend may see more social network activity related to Basque separatism due to the confirmation that Idoia López Riaño, the former terrorist nicknamed “The Tigress”, will be enjoying a three-day permit from Zaballa prison in the province of Álava after the National High Court accepted evidence that she is a reformed character.
López Riaño is currently serving sentences totalling over 2,000 years for her part in 23 murders between 1984 and 1986, but after entering jail her militancy has softened, and five years ago, she was expelled from ETA for signing a declaration of repentance. In November 2014 it was ruled that she could be allowed out of prison on a regular basis to take driving lessons as this would be beneficial for her eventual reintegration on release, and the woman nicknamed “The Tigress” on account of her beauty and her ferocity will be released from prison on 8th December 2017 after serving 30 years behind bars. At that point it will be seen whether or not she is able to integrate successfully into “normal society” and, indeed, whether other members of society are ready to accept her.
The Monarchy, bullfighting and partying at the Feria de Abril
For the residents of Sevilla this week has been dominated by the Feria de Abril, an event which dates back to 1847 and is one of the largest and most colourful popular fiestas in Spain. Year after year it hosts groups of partygoers laughing and dancing in the “casetas” (marquees and open-air bars) until the early hours of the morning, fuelled by sevillana music and plenty of tapas and sherry wine, and this year the celebrations started on Monday evening with the switching on of the 25,000 light bulbs in the main entrance gate.
Interestingly, the bullfights which preceded the Feria were attended by former King Juan Carlos I, a great bullfighting fan, who was warmly welcomed by the crowd at the La Maestranza ring. While his son Felipe VI remains non-committal in his attitude towards the controversial issue of bullfighting, Juan Carlos is a lifelong fan and attended the event in Sevilla in the company of his daughter, Princess Elena, and his granddaughter Victoria.
Even in the Borbón family, it seems, the stance on bullfighting may be changing, as is the case in Spanish society as a whole, and although Elena is also unequivocal in her support of this most traditional of Spanish events, Felipe VI is far more circumspect in keeping out of the whole debate.
Neither of the two monarchs, though, will have been amused by the scene at Valencia Town Hall on Thursday, when the Republican flag was hoisted to commemorate the 85th anniversary of the declaration of the Second Republic in 1931. This gesture was repeated at various Town Halls across Spain, particularly in Andalucía.
In Granada, meanwhile, apart from the controversy over the Mayor there is also a good deal of talk regarding a spate of 14 robberies in 3 weeks at pharmacies in the province. The gang perpetrating these crimes are capable of removing cash tills in under a minute before fleeing the scene, leaving investigating officers in no doubt that they are dealing with a highly professional outfit, but there is one question mark over the ruthless efficiency with which they operate: on one occasion one of the gang went back in to the chemist’s after removing the tills to add a hamper containing items for a newborn baby to the loot.
A more shocking crime took place on Monday in Madrid, where plastic surgeon Ignacio Frade and his 94-year-old father were attacked by “hitmen” who the victims believe were searching for documents which could incriminate various individuals. Dr Frade was a key witness on the “Meño Case”, wherein compensation of a million euros was awarded to the parents of a young man who spent the last 23 years of his life as a vegetable after a routine nose operation went wrong in 1989, and he believes this attack was related.
The week ended with tragedy in Tenerife when an apartment block collapsed in the town of Arona on Thursday. The bodies of six victims have been recovered from the rubble but there is still a high probability that the number will rise as the rubble is cleared. On Sunday morning it was reported that unlicenced building works in the lower section of the block appear to have been the cause of the collapse.
Brexit from a Spanish point of view
As the press in the UK focuses more and more on the possible consequences for the UK if the country were to leave the EU, there is also growing interest in the rest of the continent on what the implications might be for the remaining 27 Member States if the British public vote in favour of the Brexit on 23rd June.
The Gibraltarian government has already expressed its concern that if the UK leaves the EU this may encourage the Spanish to make another concerted effort to regain sovereignty over the Rock, but in many ways Spain should be more concerned over other possible effects on the economy and on Spanish nationals. Prime among these are the issues of migrant workers and tourism, and such is the concern in this country that the Spanish caretaker government is among those actively lobbying for the UK to remain a part of Europe. Click to read more about the potential problems for Spanish nationals seeking work in the UK should the UK vote to leave the EU.
This week the British media is full of the grand Brexit debate, polls indicating a fairly level pegging, with the "Ins" holding a slight advantage over the "outs" according to this week's polls.
Click to see all Brexit stories posted this week:
And finally, sports news: the last few days have been little short of disastrous for the mighty FC Barcelona football team. After months of invincibility in all competitions they are now out of the Champions League, and their lead at the top of La Liga, which was thought to be unassailable just a couple of weeks ago, has now been slashed . On Saturday the situation was further exacerbated when Real Madrid thrashed Getafe 5-1 putting them within one point of Barca. Football fans are advised to look out for the home fixture against fourth-placed Villarreal on Sunday evening: another slip up at home and the final straight of this season’s title race could become very interesting indeed!
Currency Exchange Rate this week
It's important to keep an eye on the exchange rate if buying a property or transferring your pension
This week the Sterling-Euro exchange rate has recovered slightly from the 10 month lows hit last week, meaning that anyone transferring 100,000 euros over this week to perhaps buy a property, would get 430 euros more for their money than 2 weeks ago.
When rates are as low as they are at the moment, choosing how you transfer money and when, really does make a difference.
Spanish property news
For once Spanish real estate this week has not been dominated by data regarding sales figures and average prices, with the only major contribution in this field coming from Eurostat, the EU’s statistics bureau.
The data for the last quarter of 2015 which were published by Eurostat show that show that Spanish property prices rose by 4.3 per cent last year, well above the Eurozone average of 2.9%, despite remaining flat between October and December, and while the rate of increase is a long way short of those recorded in Sweden (14.2%), Hungary (10.3%) and the United Kingdom (7.1%) this seems to consolidate further the feeling that a steady but unspectacular recovery is likely to be maintained in 2016.
A lack of statistics does not mean a lack of news, though – in fact some might argue that the opposite is true – and various other items provide plenty to chew over. For example, the fact that both vendors and purchasers have renewed confidence in the market was reflected by the announcement that the Spanish “bad bank” Sareb has put well over 2,000 coastal properties on the market with a view to selling them during the coming summer, including almost 800 in the province of Castellón alone, and the rest of the Mediterranean coastline is also well represented with numerous homes available in Murcia, Alicante, Catalunya, Andalucía and the islands.
The offers are suited to almost any budget, with asking prices ranging from 32,000 euros for a one-bedroom apartment in Torrevieja (Alicante) to 866,300 euros for a 342-square-metre chalet in Calvià (Mallorca), and the Sareb decision adds more options to the already wide range of homes on the market at prices which are eminently affordable.
Two important pieces of mortgage news have also appeared lately, one of them potentially of interest to anyone who holds a mortgage in Spain and believes that they should be making smaller monthly repayment instalments. A ruling by the Mercantile Courts of Madrid is set to benefit up to two million homeowners throughout the country, effectively obliging banks to return excess interest payments made over the last three years under “floor rate” clauses hidden in mortgage loan contracts.
Anyone who has paid interest since May 2013 could benefit from the ruling, which is expected to result in the reimbursement of some 5.3 billion euros, and bank customers with variable rate mortgages are strongly advised to consult their financial advisers in order to establish whether or not they are entitled to refunds.
Another important piece of advice, this time to prospective buyers, is to bear in mind the option of a fixed rate mortgage. Of late the low Euribor has made variable rate loans especially attractive in the short term, but has also presented a dilemma for both banks and borrowers regarding the type of mortgage which is likely to be most advantageous over a 20-, 25- or 30-year period, and now it seems more customers are opting for security in the sense that they know exactly what their repayment schedule will be over the entire term of the loan even if the Euribor should soar to new heights.
According to the Spanish mortgage Association (AHE), as many as 40% of borrowers are now choosing to set a fixed interest rate on their loans for longer than the susual twelve-month period, and while only 8.5% of the contracts extend that period to ten years or beyond it is clearly an attractive proposition to many. Almost all banks offer fixed rate alternatives, and before signing on the dotted line it’s certainly worth enquiring how these products compare over the full duration of the mortgage!
Finally, long-term property news in Madrid: the DCN development company has outlined its plans to build six skyscrapers and over 17,000 homes in the north of the city, with one of the towers set to become the tallest building in Spain at over 300 metres and 70 floors. The project has been on the drawing board for 20 years, and is now not far from becoming a reality and reshaping the skyline of the Spanish capital.
Certainly this is another indication that those within the sector are no longer expecting any further slump in the market: for such a major project to be presented shows innate confidence in the medium- and long-term future.
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