Quite a few people have asked me about Spain recently and whether or not it would be wiser to wait a little longer until prices drop further.

The truth is that the Spanish market has not bottomed out yet, and there are many banks and developers who will shortly be joining the ranks of those who are already very distressed. This increase in supply should cause a drop in median house prices.

However, this doesn’t make it any easier to predict how far the markets might fall or when the “best” time to buy might be. At the moment we have highly distressed stock (in great condition) that is reduced 30-50% from peak levels, and I can’t see average foreclosed properties falling much further to be honest, even though the average regular property price still has a long way to drop.

If you want an extreme example of how much property developers are suffering down there, look no further than a small Belgian developer in Marbella who kidnapped a local bank manager at gunpoint in an attempt to secure a 50,000 euro loan a few weeks ago. Thankfully he was arrested and nobody was harmed after the bank manager used coded language in a phone call to his branch who then alerted the police.

I kid you not folks, it was reported in El Pais.

Feel free to view our Spanish property listings.

 

Kind Regards

 

Colin Murphy

Director

www.torcana.com

I watched a great documentary last night about the famous Frost / Nixon interviews of the late 1970s, and after it finished, I couldn’t help but indulge myself by drawing a few interesting parallels between the character arc of David Frost and that of the average property investor over the last couple of years.

 

David Frost used to be a somewhat confident, adventurous and carefree man who achieved easy fame through a variety of lightweight and rather wacky tv shows. He then came up with a brainwave involving an exclusive interview with Richard Nixon. Against all the odds he pulled it off and syndicated a series of groundbreaking interviews with the highly controversial ex President worldwide.

 

During the first three programmes Frost was alternately cautious, fearful and overawed by his subject; but by the fourth programme, a much more focused and aggressive interviewer had emerged. He went onto receive immense critical acclaim for the incredible responses and emotions he drew from the famously shrewd and taciturn Nixon.

 

Confident, adventurous and carefree are also adjectives that could easily describe the mindsets of many property investors purchasing during the high flying years of 2002-2007. Cautious, fearful and overawed would also be an accurate depiction of how most felt towards the end of 2008.

 

It’s all changing now though. Today’s buyers are, if you’ll permit me to finish the narrative, much more focused and aggressive than those who preceded them.  The Irish and the British are still buying properties, but they are much less inclined to purchase for a quick return and are instead carefully analysing distressed properties in US, Spain and Florida. They are also negotiating hard with sellers to achieve a high rental yield and are very focused on timely delivery.

There’s no doubt that it’s still very stormy out there, but as indicated in Issue 2 and in the Orlando Sentinel today, there are many clues out there that suggest we could be in the process of turning a very important corner.

 

Kind Regards

Colin Murphy

Director

www.torcana.com

 

While Irish taxpayers will understandably be galled at the thought of paying for non performing property loans; I don’t really see what difference it makes whether the loans based on the purchase of Irish or foreign land. The purpose of the National Asset Management Agency or the “bad bank” as it’s more commonly known, is to provide certainly about Irish banks balance sheets by removing assets whose value is worrying investors.
 
This should give investors a measure of confidence, as the government is effectively forcing the banks to write down the value of the loans before taking them over. However, they’ll be concerned about the (vague) levy that could be charged back to the banks (and hence their investors) if the Irish government makes a loss on these assets down the line.

I actually think the worst performing loans are going to be those given to purchase scandalously overvalued Irish land (a prime example being the Jurys Ballsbridge site in D4). I don’t see why they wouldn’t be able to recoup a decent percentage of loans given to purchase in places like Florida and Birmingham (given time), although I’d imagine most of the Eastern European loans (a very small percentage of the total) will simply be written off.

Kind Regards

Colin Murphy
Director
Torcana Ltd

 

I was at the Place in the Sun exhibition in London last week (3rd April), and while the attendance numbers seemed to be holding up, the buzz on the floor of previous years was definately lacking.

 

My opinion is that a massive decline in the off plan property investment model was at the root of this.

 

The British and the Irish don’t seem to be interested in putting down deposits for properties due to be built in 2-4 years anymore and for a variety of good reasons.

 

Firstly, many of the offplan purchases they made from 2003-2008 have either not been built or have not achieved anywhere near the rental income promised. Secondly, it is now extremely risky to assume that they will get bank financing to pay the final 60-80% deposit on completion. Thirdly, why would they want to purchase an offplan property when they can buy a finished property from a distressed vendor at a much lower price?

 

For example, Torcana is now selling fully finished and tenanted properties in wealthy Orlando suburbs that are significantly cheaper than offplan properties that were promoted in Romania just six months ago.

 

Who’d have thought that could ever happen?

 

 

Kind Regards

 

Colin Murphy

Director

Torcana Ltd

The image of the swashbuckling Irish investor has taken quite a hammering over the last 18 months. Both Irish and non Irish media publications frequently expressed their admiration at the way the Irish purchased enormous amounts of offplan investment property throughout Europe and the USA.

Unfortunately, many of these same investors are now frantically trying to cut their losses and have retreated back to Dublin, Cork and Galway with their proverbial tails between their legs.

 

Where are we seeing market activity?

 

I honestly do think that the types of properties Torcana are promoting (i.e. sourcing high quality finished properties available at large discounts from highly distressed vendors) is the only market niche that has seen an increase rather than a dramatic decrease in activity lately.

The sector was previously dominated by the offplan market for vacation properties, for investment properties, and for a combination of both. In the next post I’ve described why demand for these types of properties has fallen off a cliff.

Markets which did well for completed / 2^nd hand properties, such as Germany and France are both also suffering quite a lot now.

 

Anybody out there agree?

 

 

Kind Regards

 

Colin Murphy

Director

Torcana Ltd