Times are tough in Spain. Half her youth are unemployed – if they haven’t emigrated. Spain’s economy, its banks and the Spanish real estate industry are in tatters.
They built too many homes in Spain. Homes that nobody would ever want. Speculators snapped them up, betting that prices would go even higher. Then the party ended in 2007. By 2008, activity in the Spanish real estate market stopped completely.
Estimates put the total of Spain’s excess supply and distressed inventory as high as two million units. Much of this inventory (50% is a reasonable guess) is along the tourist-friendly costas.
No genuine efforts have been made to sell this inventory. Until now.
Recently, a banking contact called me with an opportunity that grabbed my attention: Newly completed condos in a historic area minutes from Granada’s old town. A bank has foreclosed on the developer. Prices start from under $100,000. Up to 95% financing is available. Five minutes later, I booked my flight.
Sitting there in bright warm sunshine looking at the snow-covered Sierra Nevada Mountains, things didn’t feel so bad. Bright blooming flowers lined the streets. Cured meats hung from the ceilings of little tavernas.
Home to three UNESCO world heritage sites (the Alhambra, Generalife and Albayzin), Granada is steeped in history and attracts visitors from across the world.
Its international airport has flights from most major European cities, and it’s within a two-hour flight range of Northern Europe’s major population centers. I flew into Malaga, a town that’s less than 90 minutes away on the coast.
Culture, beaches, world-class golf and other outdoor activities are easily accessible. This area appeals to visitors on a weekend break, golfers, history buffs and even as a wedding destination.
Domestic visitors and North Americans come in large numbers. And it’s a beautiful place to retire.
Granada escaped the major over-development seen on Spain’s costas. Development has been tasteful, and there isn’t the major oversupply problem that we see elsewhere. This part of Spain has intrinsic value. It will always hold appeal.
This also means that distressed completed condos in the right part of town are almost non-existent. That’s why I booked my flight within minutes of hearing about this opportunity.
The area where these condos are located is peaceful, quiet and classy. It’s surrounded by high-end villas with pools. The area is known as “Little Vatican” because of the churches and convents dotted around the neighborhood. Granada’s historic center is seven minutes away.
Construction of the condos is complete (to a very high standard). When scouting for distressed opportunities, I’m only interested in construction that’s complete. I’m looking for somewhere that doesn’t have a supply overhang. This is a stunningly beautiful place that ticks all these boxes.
With prices for an 800-square-foot condo starting at less than $100,000, this is a killer deal. The bank which foreclosed on the developer is offering 95% financing. Put simply: they are trying to turn a non-performing loan to the developer…into multiple, smaller, performing loans to individual buyers.
These condos are just one example of the Spanish real estate bargains that are starting to pop up.
for The Daily Reckoning Australia
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