I just read a fantastic article comparing the housing busts of Ireland and Spain, which are almost exactly the same with one difference; while Ireland quickly accepted the problem and dealt with it, Spain continues to be in denial as to the true extent of the crisis. This is set to lead to another difference, while reports indicate green shoots of recovery in the Irish housing market, the Spanish recovery is set to take a lot longer.
Building in Ireland came to a near dead stop they purged lenders of 74-billion Euros (US$98-billion) of mostly toxic commercial mortgages by creating a bad bank, and poured enough cash into the financial system to make it among the best capitalized in Europe. In Spain they are still building, still touring the world trying to bring back the foreigners, and still saying that prices have only fallen by 22%.
However, investors are opportunists, and that opportunism does not always depend upon a quick recovery. Right now opportunities do exist in Spain you just have to know where to look.
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For example, as part of this denial and the desire to control the slowdown rather than accept it, bottom it and move forward, Spanish banks have begun offering 90% and even 100% loan to value deals on their repossessed properties. Some would say that this is clearly just recycling a problem, but investors are rarely so pragmatic when they see a chance to make money.
There is a lot of talk about the new Paramount theme park which has finally seen construction commence in Spanish Murcia, which coincides with the opening of a new international airport in the region as well. According to bearish reports the new theme park will bring in an additional 3 million visitors and leave Murcia with a 15,000 shortage of hotel rooms, making for potentially a very good rental opportunity. And of course, there are opportunities to purchase repossessed properties at big discounts close to the site of the new theme park.
BankRepossessionsSpain.com is currently offering repossessed properties in the Condado de Alhama resort just 5 minutes away from the theme park location at discounts of up to 50% from 2008 prices and loans of up to 90% loan to value. Condado de Alhama is a Polaris World resort complete with 18 hole Jack Klauss golf course and world-class facilities, pools, tennis courts and a large town centre build round an fantastic water feature. And that is just the closest repossessed property we could find, there are dozens more properties to be found in Murcia, where the low prices combined with the new airport and theme park make for a very attractive investment package.