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Spanish property and the Greek Crisis: What a 19 days and 19 months this has been for everyone…

Author:   |  November 7th, 2011

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Various national Press and TV media have again asked VIVA to comment in the past few days about the Greek crisis and the Euro currency issue affecting our Spanish property market. There was no short reply, and we couldn’t spend hours talking to them all, so this was our considered and rather long written response.

Phew… What an incredible drama and what an unbelievably stressful time we have all been through since the whole Greek crisis began to unveil itself some 19 months ago and almost spin out of complete control in the past 19 days.

Incredible frustration we know…

In the past two months, within VIVA we have seen record numbers of viewings for our properties from clients all over Europe. We know from our business history, from our website traffic and from the overall downturn in Spanish property sales over the past 5 years that there is now a huge reservoir of people, who are our clients, that are now eager and wanting to make their move into the market and buy.

Everyone knows that prices have been brought down to levels that would have been thought impossible to see. Developers, Banks and Private Vendors who feel they now simply have to sell, have reduced their prices to do exactly that: Sell.

As a result of this, in the first part of October, continuing from a really successful summer, VIVA saw its best sales performance in the past 5 years with properties being sold every single day.

Then coming to the boil, the Greek crisis that has been ever present like the elephant in the room for the past year and half, came crunching to our and everyone else’s door, and for a moment, or 19 days, almost slammed it shut. We then sold a property every four days instead of daily…

It is just another moment in time though…

From the busy activity of everyone in VIVA negotiating contracts with buyers and vendors daily, creating win/win scenarios on all sides, our business slowed for a moment to a quarter pace.

In just three weeks, because of the issues relating to the bailout decision of the Greeks, our own little world of Costa del Sol property was right there alongside the big wide world economy on a roller coaster ride that seemed to threaten from nowhere all our futures.

However, we are not new to this experience, we have been here before, many times before. In fact if we think about it, doom and gloom were present all the way back to the very day the VIVA team first opened its doors, and found headlines across the European press announcing: ‘World Facing Bankruptcy’. This was all back in the late 90’s.

Nothing of course, could have prepared us for the events of the past three years.

We know that. Yet we have come through this time. We put our minds to the task and have carefully, patiently worked hard to serve our clients’ interests right through the many ups and downs since the beginning of the global crisis and in fact long before that with our own market troubles.

So, in the past few weeks, with incredible frustration, we have watched again as the markets, the future of the Eurozone economy, everything that affects our and every other business, was turned upside down, once again – for a moment in time – to something quite different than what it seemed just days before.

And now? Well it’s very interesting. We see this particular period of crisis, as an event more positive than any that we have endured before. In fact in VIVA we have breathed a huge sigh of relief.

It’s all about the Euro…

The real effects on our world of Costa del Sol property have just been shaken out more clearly by the Greek crisis.

Despite what has at times seemed like the madness of the Greek Prime Minister, as he pirouetted, and turned himself and his country inside out over the past weeks, and as the Greeks now debate their potential coalition government, we believe this has in fact real benefits for us all.

The end result is something close to being outstandingly good for the Euro and what is good for the Euro; is of course certainly good for VIVA’s clients.

Since the Greek crisis began 19 months ago, our clients who have bought property over that period, have all had absolute faith that the Euro would survive.

Why would it not? Over 380 million people use the Euro as their currency. There might be arguments over the Eurozone economy; there may be debates on the viability of a next stage federal United States of Europe amongst the 17.

Those discussions and that debate will always be part of our future in the Eurozone. It is entirely normal.

My German compatriots and the fellow nationals of a dozen other VIVA staff, who come from all across Europe, might well have been furious at the requirement of a 50% default for Greece, again this is entirely normal.

All of us demanded that the Greeks face cuts like the rest of us, pay their taxes like the rest of us, and plan properly for the future like the rest of us.

We had, however, no concerns about the future of our Euro currency. Then for a few days that all changed.

The Euro went to the edge and looked over the top…

In the end the Greeks have done us all a huge favour.

In VIVA we are multi European, our staff are from almost every country in the zone.

We all know, that in all of our own countries, that there is no majority or force for change anywhere, that wants to return to individual sovereign currencies.

We took this for granted.

The result would be cataclysmic, the very idea surreal, the fact of it impossible to understand now that we are past a decade with our own currency.

We are not blind or deaf, we know this never stopped commentators speculating in the press and on TV on the – what if the Euro collapsed – scenarios, and it didn’t stop the financial markets – who got us into this entire mess – wildly reacting to the possibilities.

We talk about the general economy amongst us all in VIVA; we have to, as it is a primary concern for us and our clients.

We saw the Greeks suffer two rounds of austerity and cuts. We understood that sadly for the Greeks this was not enough. We understood the demonstrations and realised along with everyone that Greece would have to have a partial default at least, and that everyone else in Europe would be affected as a result.

Everyone accepts that this was all part of a painful but necessary recovery process, that both Portugal and Ireland have had to suffer, that we all know both Italy and Spain may yet have to go through also.

None of this stopped VIVA selling a property, every single day in the early part of October, it was not an issue it was just another hard fact of economic life.

So when the final bailout package was presented and seemingly accepted by the Greek Prime Minister, from it all being very tense, we were relaxed, everything seemed to make sense. Those clients who had been tentative for a week or so about their decisions, could also be assured.

Yet when the Greek Prime Minister then suddenly called for a referendum, well for a moment this simply blew us out of the water.

Overnight the Eurozone was turned upside down, the Greeks from nowhere took us straight into their parliament, and right to the point where we looked on to see if via their confidence vote a country might actually choose or have the will to move away from the Euro.

The impossible – possibility – became a may happen reality.

Although it is clear from a national poll in Greece on Friday that showed 70% of Greeks have no desire to return to the Drachma, Mr Papandreou wasn’t going to simply make the decision about the bailout alone.

Phew… We watched in real horror as Greek MPs voted in their confidence motion on Friday. Could the Euro be split apart?

But no… What has become plain is that the Greeks have accepted their situation and their obligation. The full truth had hit home, a partial default was unavoidable and now a massive series of cuts and promises to the rest of Europe would this time have to be made and kept. They will be.

The Euro is stronger than it has ever been…

What price now the Italians? Are they going to take the Euro to the edge?

No, they now have to face up to what the Greeks had to face up to. They know that there is no easy way out for them. They have no stomach for the same process to occur in Italy over the next 19 months that Greece has endured.

What is the situation in Spain? Well Spanish banks have already demonstrated they have a lower financial requirement than Germany or France, that they can raise their capital through private funding. Unemployment has peaked, yet both main political parties are in complete acceptance of the need for austerity measures. Spain does not want the Peseta or the pain of Greece’s nightmare.

The plain and simple fact is – the Euro is going nowhere – it is here to stay.

If there is no will amongst the Greeks to return to the Drachma, then why would the rest of us have the will?

2-tier Euro…

And there will be no 2-tier Euro.

I had this very conversation with a German client on Friday, who seemed to think that in a few months there will be two types of Euro, one being worth half the other, and that he could then come to Spain and pay half the price for a property that as a bank repossession had already been reduced in price by 50%. So he offered half of that price today, thinking it only fair and logical.

‘Well maybe’, I said to Helmut, ‘if the Greeks had effectively voted to return to the Drachma, maybe you might have had a point’. But let’s be realistic. Northern Europeans are not going to have a currency that is twice the value of that of the southern states, no matter how many journalists would like to play with our emotions. It is just a fantasy.

There can only be one Euro, there are tough times and difficulties ahead for sure in all the economies, but the idea and in fact the reality of a split, has now been tested by the weakest country.

Greece has demonstrated that despite all their terrible problems they absolutely have no appetite for doing anything other than remaining in the Euro and this is central to their future.

What this means to us and our clients…

We in VIVA do one thing really well. We have done it for 14 years. We sell properties on the Costa del Sol. We sell them in Euros. We will be selling them in Euros for the next 14 years as well. We have clients who have paused quite naturally over the last 19 days and worried for a moment as we did, if the unthinkable might happen.

We all went to the edge on Friday night, we looked over, and stepped back.

Spanish property recovery and our buyers today…

Since 2009 everyone has always asked us: When is the market going to pick up?

In 2000 they used to ask us: When is it going to fall?

The wiser client seems to want to know: When did the last boom truly begin? To understand and ask us: Where is the real bottom of the market?

In 2011, we clearly show our clients that certain properties in certain areas are at their absolute bottom in price, there are limited Private Vendors, some Banks and Developers who cannot possibly go any lower – they are at the bottom of the market, and they may be followed later by others.

In 2011, as we said at the outset of this post, the number of VIVA property viewing clients, and the vast numbers of registered web clients have all been increasingly proactive upon their interest.

With the Greek decision on Friday, in English we say Phew… in Spanish we say Puf… in German we say Uf… and we say the same in a few other languages too.

Our clients know the economy is on the floor everywhere. Our clients know that the only time to buy is at the bottom of the market. Our clients’ only worry recently has been that the Euro might fail.

Merkel and Sarkozy offered the Greeks the opportunity to say – No and Go – from the Euro, it didn’t happen. Angela Merkel has also stated it will take the Eurozone ten years to recover overall, but the very existence of Euro currency itself, we believe will now go from strength to strength.

Sales are already increasing and prices will follow…

Sales may well increase in pace, just as is now happening in Florida, as people understand just what a massive fall prices have now taken, how they will then begin to climb once again and that inflation will eventually return, being the traditional way to reduce debt for the economies.

We know that regardless, the proven safe haven in those times is bricks and mortar; the question then becomes, where to buy?

Well, we know that people buy our property not just for investment but also for use, and that our area has the most outstanding quality of property and lifestyle not just in Spain but all of Europe.

We know that 48% of Britons for example, would like to live abroad and they are not alone. Along with the majority of the rest of Europe they choose Spain as their preference.

When you do buy in Spain – you not only get the value, you also get the use of your money – you get to sit and sip a red wine on your terrace and get the pleasure of your investment while watching the sun set.

Now you can’t say the same about your pension fund, while it’s losing its value and all covered in the dust of the financial fallout.

What will be, will be – Lo que será, será.

We are not stupid in VIVA. We have been around way too long to need to create false hype or play with emotions in bad times or good. The market is the market. It could certainly have been disastrous for everyone if the Greeks had left the Euro.

Today, is a different story, they did not. We are just thankful. This was just another mad moment in time. There may be more ups and downs to come.

Yet we can prove that we have a vast number of clients eager and wanting to buy. We see more and more clients viewing property every day.

We now also know that the one phrase we have always been cautious about using: ‘There has never been a better time to buy…’ is now certainly becoming true for some, and of real interest to others.

Phew… Puf…. Uff… and amen to all of that!

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