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[EP7] La Piedra Podcast - Spanish Politics Special with Mark Stücklin & Sean Woolley

[EP7] La Piedra Podcast - Spanish Politics Special with Mark Stücklin & Sean Woolley

The 7th episode of “La Piedra”, Cloud Nine Spain Managing Director Sean Woolley and Mark Stücklin (Spanish Property Insight) tackle the hot topic of Spanish politics in line with the upcoming general elections in July and offer their view on how this might affect the real estate industry.

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Link to the YouTube video here

Sean: Hello, everybody. Welcome to the latest edition of the La Piedra podcast. My name’s Sean Woolley. I’m managing director of Cloud Nine Spain, a real estate agent based in Costa del Sol. With me as always, I have my trusted partner, Mark Stucklin, from Spanish Property Insight. Hi, Mark, how are you doing?

Mark: Good morning, Sean.

Sean: We are gonna be talking today about politics. Now you might think, what has that got to do with property? And it turns out it’s got quite a lot to do with property. And what happens in the political scene often sways buyers’ and sellers’ thinking. So, we’re gonna be talking about what’s happening politically here in Spain, particularly with regards to housing and what is likely to happen, bearing in mind that we’ve now got a general election looming, which was a little bit unexpected. And then, we’re gonna be looking at that, and how that translates to feet on the ground, whether it’s putting people off. There’s a few figures that have come out recently, suggesting that the amount of buyers in the market is down, particularly in certain areas of Spain and the islands. So, we’ll be looking at that and wondering, if there’s anything to do with the political scene here, and whether that is influencing potential buyers. So, Mark, why don’t we kick off with the politics? Would you mind giving our listeners and our viewers just an overview of what’s been happening politically? Because I’m guessing you are probably far more able to do that than I am.

Mark: Yes. It’s certainly something I follow. I follow Spanish politics from the perspective of how it impacts, and the risks and implications for the housing market. I also follow it, because I live in Spain, I pay taxes in Spain, and I’ve got children in Spain, so I follow politics more generally. But I’m very focused on the housing politics, the politics of housing. And it turns out that not just in Spain, but pretty much everywhere, housing is getting more political. So, without wanting to get into any, we’re not gonna talk about the politics, whether the merits of any side of the… I’m not picking sides, just pointing out and trying to help people understand what I would call the political risk. Because when you buy property in any country, even your own, but especially when you’re buying overseas or abroad, there is always an implicit political risk. To give you an example, anyone who, let’s say, bought a house in Cuba just before the revolution in ’59, as many people did. It was a free market and you could buy property in Cuba. And then, of course, along came Fidel Castro. And before long, all property had been nationalised. So, that would’ve been a total loss, a complete loss of that investment. So, just as to point out to highlight that there are political risks there, as there have been also in Venezuela, where a lot of private properties have been confiscated as happened in Zimbabwe, in Argentina. You could call it a political risk, but I know of cases where people have just had their property stolen by people falsifying notarized documents, and deeds, and stuff. So, the state doesn’t protect your property rights value very well in many parts of the world. And that’s a political risk, because it’s the state that’s supposed to. If private property is recognized in a state, it’s the state that actually is the one that’s supposed to protect those property rights, because otherwise, you have to get yourself a gun. Nobody wants that. So, there is always an implicit political risk when investing in property. Especially, also it’s a big ticket item. If you buy a house, for most people, it’s one of the biggest investments in their lives. It’s not like buying even a car or a sofa. Those are all big tickets. But there’s nothing like, for most people it’s housing and property that’s the biggest investment they’ll ever make, one of the biggest investments. So, bearing in mind that… And the political risk, like I said a little bit earlier, the housing is getting more political in Spain, more of a kind of hot potato as it is. I’ve been watching this. I’ve also kind of followed this in the UK. And of course, when demand goes up and the supply doesn’t go up, then you get this situation of, prices rise or demand is left unsatisfied. People can’t find what they… They’re not finding the housing that they need. And that’s now particularly a problem in some parts of Spain, like, for example, Barcelona and the Balearics where there’s much more demand than there is supply, which creates a problem. And with problem comes disaffection. And then, the politicians are never far behind that, looking for ways to appeal to those disaffected voters, and with their different policies for how to solve what is actually a real problem, for example, in Barcelona that you can’t find housing. There’s many people that can’t afford the housing there is. And then, policies are introduced to try to, in theory to address that problem, but sometimes they make the problem worse. But that’s another story.

Sean: I’m sure, I’m sure. In terms of what we’ve got at the moment in Spain, just in setting the scene politically, we’ve got two main parties, haven’t we? Which effectively are left of centre and right of centre. And then there’s actually a lot of other political parties. But small ones that hang on the coattails of these major parties and help them to form a coalition, if they don’t have an overall majority. And I think it’s fair to say, at the moment, we have a socialist government in place. But they can’t get through, I think, what they want to get through in parliament, which is why, after the local elections, they came out and decided that they would spring on us a general election, which is due to take place in July. Is that a fair summary of what’s happening?

Mark: Yeah, more or less. Spain used to be a bi-party system. The government alternated between a centre right and a centre left. The, socialists, the centre left, and the popular party are the centre right. And they tended to have an absolute majority. And now that is not the case. Now, neither of those two parties has much chance of an absolute majority. So, we have coalitions. So, right now we have a coalition government, which is the bigger party of the socialist with a junior coalition partner being the called Podemos, which means, which is, “United we can.” But they’re not very united. But anyway, they have… And curiously, just to bring it back to how housing has become very political. And just before the local elections of Sunday before last, on the Friday before the election, the government passed or had passed, but it came into law, a housing law, which they say is the first housing law that Spain’s had, and there was a lot of attention given to the headlines. It dominated the headlines leading up to the local elections. And as I said, it passed into law the Friday before the elections. You have to assume they did this to woo voters. They wouldn’t have done gone to all this effort, if it hadn’t been to be appealing to voters. But as it happened, the local and regional elections were a disaster for the ruling coalition in Madrid. The socialists saw quite a dip in support. And the Podemos party got really quite hammered, and basically wiped out in most parts of Spain. And so, you have to think that, well, whatever its other merits, the housing law didn’t achieve the objective of wooing voters. And the Spanish prime decided to call a snap election. Well, bring forward a premature general election for the 23rd of July, rather than December. He obviously calculated that it was better for his party to have an election immediately, as soon as possible, rather than wait until the end of the year. And to some extent, the housing law played a role in this. At the very least, it didn’t woo voters in the way it was supposed to.

Sean: And why do you think it didn’t do its job? Why do you think it didn’t work for them? Because I’m guessing, obviously, I know a little bit about it, because we need to know about it. From a socialist government, it’s what you would expect, isn’t it? That it very much protects the underdog, like, there’s a lot of talk about the rental market. So, it was engineered to protect tenants in the main. But why do you think it didn’t work for them?

Mark: Well, maybe to a certain extent, it might not have cut through because it had just been introduced. But I would say it was the legislation that got the most attention in the run-ups to the local elections. There were a few others that were introduced that they tended to be introduced by the Podemos side of this coalition. And they haven’t generated what you could call universally good press for the government. But I think, the housing law, it introduces rent controls countrywide, it relies on local governments and regional governments to create what they called strained markets, and to do a bunch of things in order to introduce rent controls. And most regional governments who are now in the hands of the other side have said they’re not going to do that. And even socialist controlled regions have said they’re not going to introduce rent controls, because they think they’re counterproductive and will make the situation worse. And they would rather focus their efforts on increasing the supply of affordable housing and social housing. And then, there was a lot of talk about how it got a lot of coverage, that it’s quite favourable to, let’s say squatters. I mean, to people who the landlords and owners can’t get people out, whether they’re squatters or tenants who aren’t paying the rent, or for whatever, there’s a bunch of different reasons why, but it’s getting increasingly difficult. If you own a property and someone, for example, a squatter, they were protected under this law than they were before. So, it makes it difficult to get them out with the increase the costs and the risks, and this kind of thing was also part of the story. But for whatever reason, the housing law didn’t do the government any favours being brought out just before the election. It didn’t seem to help them in any way. And that means we now have a general election in July, and that will maybe mean that we have a new government from the centre right with their coalition partners, if they can’t get an absolute majority, which doesn’t look likely. Not out of the question, but it doesn’t look likely. Then they’ll have to do a coalition with the further right, just like this government has done a coalition with the further left. And of course, that has all sorts of implications. But in terms of the political risk, what is that? That’s, like, that you lose your property rights, or your property rights are curtailed, and that costs go up, which is that taxes… And also that market liquidity goes down, because if something happens, like we were talking before, in Catalonia, there was a lot of trouble and disruption about the question of the Catalan unilateral declared independence, and the process to try and achieve unilaterally, a declaration of independence from Spain, which led nowhere, but it did put off a lot of investors, certainly for a year or two. And that reduces buyers in the market. And that means reduced liquidity, which is a risk for, people who needed to sell in that period didn’t sell well at all. Let’s put it that way.

Sean: I think it’s like any market, isn’t it? People don’t like uncertainty. They like stability.

Mark: Hate it.

Sean: Yeah, when the Catalan thing started kicking off, we had clients talking about it as well, saying, “Oh, no, I’m gonna leave Catalonia well alone at the moment.” And people just don’t like the uncertainty of what’s going on. What do you think? People are saying, like you said, that the centre-right party is likely, no guarantees of course, is likely to win the general election probably in coalition, as you said, with parties further to the right, which obviously…

Mark: And regional parties. It’s like they have to stitch together. They may have to stitch together a bit of a patchwork coalition. Well, we’ll see, we’ll see. But yeah, let’s carry on.

Sean: What can we expect from that sort of government? Obviously, we’ve had a period now in Spain of a socialist, centre-left government, which you feel has been influenced, because they’re in a coalition that they’ve been influenced more by the far-left parties. Now it looks like we’re going into an era in Spain where we’re going back to a right-wing coalition. What do you think we can expect from that in terms of the housing market in terms of, I mean, do you think it will just stabilize, because they’re not gonna be introducing all these new initiatives?

Mark: Well, from what I could tell, the one thing they’ve made clear, the popular party had said that they will repeal this housing law and scrap it. Whether they do or not, I mean, I always remember that the popular party and their, I don’t know, 15 years or however, the decade that they were in power, up to 2007, I think, under Jose Maria Aznar. The squatter laws are still there. They didn’t do anything really. And they did a lot of damage with laws in different regions. That was part also part of the time of the speculative housing bubble that led to incredible damage to the Spanish society, economy, and housing market. And that happened to a certain extent under their watch. So, it’s not like they’ve been always in power. They’ve got a great record. But neither is the other side sadly. But neither has the UK government got a very good record on housing. It’s like, where do we look for good housing policy that actually increases the supply of homes in all segments? And especially in the segment of people who need affordable housing, for key workers, and that sort of thing. Like in Barcelona, you need the people who do jobs, the lowest paid jobs. You need them to be able to, even if you are all sitting in a large mansion in Pedralbes, you need people, key workers to come in and help the city run, and keep it clean, and keep your houses clean. That’s always critical. You need a good housing policy to make sure that it takes account of everyone’s interests and needs. And I’m not sure where there’s a good example of country where they have actually very sensible, there’s always trade-offs, and this is something that politicians don’t want to talk about the trade-offs. There’s always trade-offs. Nobody, or not everyone’s aware of it, but there’s, like, on balance you can have a good housing policy or an unhelpful housing policy. I don’t know which country I would point to, to say, “Look, they really do it well.”

Sean: I think it’s a problem. We’re not building any more land. But we’re creating lots more people who are living longer. So, I think it’s gonna be a problem wherever you are in the world. And just to touch back to obviously the case, as you mentioned at the start, they’re not basket case countries, but as close as you can get, places like Cuba, Venezuela, Zimbabwe, which have gone through periods of lawlessness, and then dictatorship. Spain is obviously heavily regulated. It’s part of the EU. So, although there are always gonna be political changes and different policies from different governments, I guess, in terms of its stability as a place to invest money for housing, I guess it ticks a lot of boxes because of those constraints that it has to work under being part of a bigger entity like the EU. Would you agree with that?

Mark: Well, being part of the EU is very much… Property rights are guaranteed. It would be illegal to do any of the things that the countries like… And things have happened in countries outside the EU like Venezuela or Cuba. The political risk actually in Spain is very, very low. But there is a chance that under one type of government, you’ll have higher taxes, and higher costs, and more limitations on what you can actually do with, can you rent it out to tourists or not? There’s parameters in which the local politicians can work whilst respecting the overall EU guarantee of private property rights. But really on balance, Spain is a very, very low risk political risk. But there is some, and it can be like in Catalonia, there was a problem for a period. And right now with the housing law, and in the Balearics, which we’ll get to in a second political risk with the politicians and the messages they’re sending, and the cost at which reduces demand in certain segments, which makes it difficult for you, if you are… It makes it great to be a buyer. You’ve got a greater bargaining position. But thinking further out one day, you also might be a seller. Either you just have to bear this in mind, but let on balance, it’s a very, very low political risk. But it’s interesting to know about this. And I’d be curious to ask you, do people ever… Because I don’t deal with people who are actually looking to buy in Spain on a one-to-one basis, in your line of work, in the market, but to what extent do you think people know about the political situation, or are they interested, or do they just take it for granted that is safe?

Sean: I think they do take it for granted. A few of them may ask in conversation, but it’s not normally top of the list. What people want to know is, what are their buying costs gonna be? What are the taxes? And when we say, look, now we have a transfer tax that’s fixed at 7%. It used to be 8%, 9%, 10%. I’m sure, if they introduced a higher transfer tax, people would just take it on the chin, and they’d say, “Oh, okay,” because I think people are where–

Mark: Up to a point.

Sean: Up to a point.

Mark: Up to a point. There comes a point, there’s a line, and I think they crossed it in the Balearics.

Sean: Right, okay. Because what we tend to find is, I think the people that are buying with us also have rules and regulations in their home countries. For instance, I used to invest in the UK property market, and I stopped doing so because the conservative government who were just about clinging to power in the UK, they actually introduced a lot of controls to stop overseas investors buying. And also to prevent the market just falling into the hands of buy-to-let investors. So, if you were a buy-to-let investor from overseas, my goodness, you were hammered on stamp duty up to, I think, 8% or 9%, which, when it’s traditionally been much, much lower than that for first home buyers, it becomes onerous. And it worked, because a lot of the buyers who were all over the London market for instance, they pulled away, those overseas buyers. Albeit, they’ve now diverted their attention to the provinces, so places like Birmingham, Leeds, and Manchester are now full of overseas investors, because the prices are lower, so the taxes aren’t as high. But still, I think people are used to that. I think people are used to just different things being brought into play to stop things overheating in certain areas. So, I think most of the clients that we get are pretty savvy about that. Of course, like you said, there comes a point at which people find it unpalatable. They just can’t go there financially, because they feel they’re being ripped off. And that’s always gonna be the case when it gets to that point. But I think most of our clients, they’re probably not investor clients. They’re buying for a lifestyle, they’re buying for a reason that, it’s normally to improve the quality of their lives. And so, the taxes and the political environment does come a second thing really. As I say, some clients will ask it. But normally, they’re the clients that we’ve spent a lot of time with, and we’re just discussing things and chewing the fat, then they’ll bring it up, and they’re like, “What’s happening with the politics here?” A lot of people just don’t need to know, don’t wanna know. It’s just another stress that they could do without. I follow the politics in the UK probably more closely than I do politics in Spain, which is crazy. Because like you said at the start, I pay my taxes to Spain, and I should be far more aware of what’s happening with my money, and what they’re doing with it. But yeah, I don’t know. Maybe it’s just me burying my head in the sand a little bit. But clients tend not to be too concerned.

Mark: Yeah, I’ve always got the impression that a lot of people, especially, on the expat market, they like living in Spain because they don’t follow the local politics really. And they’re far away from home politics and all of its stresses. And so, you can leave the home politics out, and it’s apolitical, you’re not involved in politics. So, that’s one good thing, I guess.

Sean: Yeah, absolutely.

Mark: I think it sounds like people just, they know that the political risk is very small, and then, the taxes, well, everyone accepts especially a 7% tax rate, which is what you now have as a fixed rate under this year, down from, what was it, 10% or…

Sean: Yeah, there was a tiered system wasn’t there? I think it was 8%, 9%, or 10% depending on the brackets at which you invested. I think, also the other thing that people have gotten used to is an age of populism, where you’ve got people like Trump and Johnson, and people like that in control of governments. And I think people have got used to things changing on a weekly basis, and lots of ups and downs. So, I think Spain probably looks fairly stable.

Mark: No one’s shocked anymore.

Sean: No, they’re not.

Mark: Yes, absolutely.

Sean: And I think that’s, because of the way we absorb our news now. We get to hear about things even as they’re happening. And at the end of the day, “Oh, five more people were shot,” “Oh, interest rates have gone up.” People absorb news in a different way, and I don’t think there’s any surprises anymore are there for people?

Mark: Yeah, absolutely. So, I guess what we could say is, housing is getting more of a hot political potato in many places and Spain as well. And there is what the present government, which looks like it’s on its way out, has done to introduce some laws and regulations, which were quite restrictive, and high tax, and more restrictive, and arguably not great for… On the negative side of the equation that you look at when considering where to invest. But it might be that there’s a fairly good chance. Well, we have to wait and see what happens in July, but there’s a fairly good chance. So, there’ll be a different philosophy towards more liberal, and more deregulation, and lower attacks on the housing front. And that would, of course, it wouldn’t solve the acute housing access problem in some areas, but there’s large sways. In most of Spain, there’s absolutely no housing problem at all. It’s actually the opposite. It’s like they can’t find people to live in them, because they’ve built a lot of housing. And also the interior is depopulating, and they’ve built a lot of housing in the boom in the wrong place. So, Spain doesn’t have an aggregate housing problem, it has areas that have this problem. But those are areas that are politically important like El Paso and Madrid.

Sean: It’s interesting, because I know that the Marbella Town Hall, for instance, which is ruled by the right-wing side of the government, they are anxiously hoping that the central government also falls that way as well, because we’ve been trying in Marbella to get this town hall plan verified. And it’s taken years, decades to get it done. And every time they try and do something, it keeps getting knocked back. And it’s because there’s, obviously, the town hall in Marbella, then there’s Andalucia, which is the regional government, then the central government. So, to have everything aligned–

Mark: Would help.

Sean: It would certainly help just to get Marbella back on the move again, because although there’s a lot of new builds here in the Costa del Sol, if you actually look at the percentage that are built in Marbella, it’s very small because they just can’t get the licences through the system, because of all these issues from way back.

Mark: Marbella’s been frozen since 2008 or so. When the hill, and that era came to an end, and the rocker, and then it turned out there’d been all sorts of corruption and all sorts of problems. And then, it’s just been frozen ever since, if I understand. It’s been very difficult to do anything in Marbella, which has created an artificial restriction on new building, and renovation, and on town planning. But if you see it clearly, apart from the fact that Marbella is one of Spain’s, I would say flagship holiday resorts. It’s the most famous, it’s the most glitzy. For better or for worse, it’s got that various upmarket reputation. And in some respects, maybe this sort of control, this down period, or this frozen period has been good to just consolidate the place, not allow it to carry on growing and building. But if you look at the numbers in terms of prices, and rental prices, and demand, Marbella is just going up, and up, and up, and now I think it’s almost on par with all those beaches in Ibiza as probably the most in-demand and expensive place in Spain.

Sean: It’s interesting, because obviously there’s a lack of new stock, which is fueling the surge in prices on the resale market. But what it’s also done, that strangulation of the new-build Marbella market is, it’s actually helped the neighboring municipalities like Benahavis and Estepona, who are now almost considered alike, in terms of, they have that Marbella effect. And now people, when they talk about Marbella, they talk about pretty much everywhere, pretty much from Malaga down to Sotogrande is classified as Marbella. So, it’s helped those neighboring areas. Mark, you mentioned some stats that have come out, I think, for April’s sales figures?

Mark: The first quarter.

Sean: The first quarter, okay. So, tell me what were the headline figures from that?

Mark: Well, this is the registrar’s figures. And we’re talking about foreign demand, so house sales involving a foreign buyer in the first quarter. And I was really interested to see what might happen because last year was an absolutely cracking year for foreign demand for property in Spain. And we’ve talked about, like, what was driving that boom, and what I was expecting, I was expecting to see quite a dip in demand this year, like, the boom’s over, cooling down. And in the first quarter, actually compared to the first quarter of the previous year, overall demand did fall, but foreign demand was 8% up. So, the foreign appetite, one way or another, still, I think it’s cooling down. It’s like the rate of growth was a lot cooler, but it’s still not, I mean, 8% higher than the record quarter in 2000. No sign of a real cool down, no. But that’s overall, but the Balearics was 31% down, right out there on its own with a major decline in foreign demand. Andalucia was down 9%, whereas the Valencian region was up, Catalonia was up, Madrid was, everyone, and nationally was up 8%. Andalucia and the Balearics, there was a bit of a decline. So, I wondered what you–

Sean: What’s happened in the Balearics? What’s the reason?

Mark: Well, this is foreign demand. So, we’re not talking about the overall demand, but just specifically foreign demand. Well, the Balearics has put the price up of, who buys in the Balearics is a very upmarket area. It’s very dominated by the German speakers. And it’s had a regional government, which is very a coalition between the socialists and Podemos, this far-left party, and also some regionalists or territorialist parties who are far left, but also don’t like, are anti the rest of the world, or they just want to protect the interests of their own locals against, and see outsiders as a problem in some areas. And so, I call Mes Mallorca, Mes Menorca. So, they’re not nationalists, but they’re nationalists, but for their island. And they’ve produced, but they’ve been asking for patience and making a lot of noise about trying to exclude foreigners from the housing market because they blame foreign buyers for high housing costs, because they’re islands, they have a problem with the land. There’s not enough land. And planning permission, and all sorts of things make housing very expensive. It’s more expensive to build up housing on islands because you’ve got to ship over all the materials and stuff. There’s loads of structural reasons why housing in the valley areas is more expensive than in other areas, and they’re also very attractive. Beautiful area, lots of people buying, but tenderly buying villas on the coast. And the problem with housing access is in Palma and Ibiza, and they need more social and affordable housing. So, they’re kind of different segments. There is some crossover, but anyway, the Balearics got the easy route, just accuse foreigners for the high cost of housing, and asking to try and exclude them, get to have laws, and break the power to exclude foreign buyers. And I think that it gets through the message, “you’re not welcome,” coupled with very high taxes. Well, because it’s now 13% when you buy a villa. And if you buy a property in the Balearics, it’s above $2 million, and you’re paying 13%, you in Andalucia are paying 7%.

Sean: Right, that’s a big jump. I think you’re right. You can sense that you’re not wanted as an overseas investor. It’s like me buying in London. Once they start hiking it to a point where it becomes unpalatable, you just think, “Well, they don’t want me there”. So, yeah, it’s too–

Mark: And it’s not the only option. They have other options. People who could buy in the Balearics could come down to Marbella where they’re very welcome, and they pay almost half the tax. So, those are reasons I think that’s why. But why do you think in Andalucia?

Sean: I’m not sure. I think as I said on another podcast the other day, I think there’s a few headwinds coming our way, which have been there for the last year or so in terms of cost of living crisis, in terms of inflation increasing, interest rates increasing. So, there are a lot of reasons, a lot of objections that clients will say, “Oh, I’ll just leave it for the moment.” And I think the only reason maybe that figure isn’t worse for Andalucia is the fact that so many people still want to be here, but they’ve marketed it as the California of Europe. We’re getting clients from all over the world. So, for instance, you mentioned the Balearics tends to be quite German-dominated. The Costa del Sol used to be, 20 years ago, very Brit-Irish dominated. Now it’s kind of a potpourri of all the–

Mark: Everywhere.

Sean: Yeah, everywhere. So, I think that the reason that that figure isn’t lower is just because there are so many people who still want to make the move, who still want to buy a piece of the place because they want a better lifestyle for themselves and their loved ones. They want to live in the sunshine. They want to put their kids in a safe school, rather than somewhere in the states. And I think those reasons are winning over the headwinds, so to speak. Yeah, the headwinds are still there, but I think what may have happened in the Balearics, and I don’t know this for a fact, but obviously, because the average price per sale is so much higher than probably anywhere else in Spain. I think maybe a lot of those clients, because obviously, those clients aren’t the mass market. There’s enough of them. But they’re obviously further up the funnel. And I think that a lot of those clients were satisfied in 2021 and 2022. They were the people that came out of COVID probably wanting a change of life, a change of pace, were able to afford it, and maybe they bought their properties then. And that’s why it’s just cooled off a little bit, because that sector of the market has now been satisfied. I’m sure there’ll be a new wave of money and stuff like that, but maybe we’re just having a, “Whoo,” in the Balearics.

Mark: A pause.

Sean: Yeah, I think so.

Mark: Yeah, it’s just radically different from the rest of the story. Maybe it’s because it’s such a German-speaking and dominated market, and maybe the situation in Germany, the economy in Germany, which everyone’s got their own problems, but I’ve got the impression that the German economy’s going into recession, problems with the overall economic model. Maybe those buyers are saying, “Well, let’s wait and see what happens.” And so, it’s nothing to do with the Balearics.

Sean: Maybe you’re right, because I think any market that’s reliant on one buyer market is always gonna have an issue when that one buyer market stops buying, because who else do you pull in? And I think that’s the problem with the Balearics. I think, as I say, the difference, whether they’re areas of Spain, like the Costa Blanco or Costa del Sol is, that they’ve got a truly international client base, and we’re lucky to have that. And I don’t know if that’s due to the marketing efforts of the regional tourist boards, or whether it’s just that word of mouth. And people have got to hear about these places. But we’ve got clients this week from Australia, from South Africa, from the states, from England, from Ireland, and that’s, I hope–

Mark: We’re in June. How do you see this year so far? We’ll assume the end of July will be the first half close. How are you seeing it going? And not just in your actual office, but talking to other agents. Just to wrap up, do you see it still busy, or the same as last year, booming, busy? How would you describe it?

Sean: Well, our busiest year was 2021, so it was that immediate post-COVID thing, which I think was expected… Well, not expected, but I think looking back, it kind of makes sense. Last year was slightly off that, but still very strong. This year, we thought it might be slightly off that again. And actually, our figures to date, if we extrapolate those over the course of the whole year, would actually be almost directly comparable to 2021, our strongest year. So, what I would say is that it feels like harder work. And I think that’s because of those headwinds.

Mark: I hate that.

Sean: Yeah, I know. Who needs that? But I think it’s due to the fact that there are those economic and geopolitical headwinds. And also there’s a lot of agents operating on the Costa del Sol, certainly at the moment. So, everyone’s after a piece of the market, so you’ve gotta run a bit faster and harder to keep ahead. But all those geopolitical things as well, they open up opportunities. So, where there’s distress, for instance, in Ukraine at the moment, which is hideous what’s going on, but neighboring countries like Poland, there’s been a glut of Polish buyers on the Costa del Sol, because people are looking at getting their money out of Eastern Europe just in case. So, whilst it’s awful, it does present an opportunity for other people. I think what we’re seeing, I think I expect the middle of this year, so the next Q2, Q3, we’ll see more Americans in the market again like there was last year. They tend to wait for the holiday season, because they obviously come here for longer than a weekend, so they need more time. And the summer normally presents them with that time. I think the tailwinds are overpowering the headwinds at the moment. Now that can all change, as we know, somebody makes an announcement in Brussels, or London, or somewhere, and all of a sudden people get spooked. But I think there’s still that big, people wanna change their lifestyles, and people want what’s best for them and their loved ones. And people are now thinking, “Do you know what? What if there’s a problem in the world?” I would rather be in a place where the sun shines for 320 days. My kids are safe, they’re going to a nice school. I can go to the marina, or I can go and play golf. And I think that’s a really strong draw at the moment. So, whilst that continues, and whilst the sun continues to shine, I can’t see it. I can see little dips in the market here and there, little slowdowns as you always get. But generally, I think the trend is upwards and busy.

Mark: Yes, now I read an article in, I can’t remember, it might have been the Times, one of the British papers about how buyers from San Francisco were flooding into London. And I think Costa del Sol appeals a lot to people who are trying to get out of California and over to Europe, because it’s got that similar climate. And there’s a lot of things going on in Malaga with Amazon and Google. San Francisco, do you remember that film, “Escape from New York?” It sounds a bit like things of nowadays. It’s escape from San Francisco with the place–

Sean: It’s weird, isn’t it?

Mark: Going down the tubes. But the Costa del Sol and Marbella, in that area would be a perfect place for the people looking for a European getaway.

Sean: Definitely, definitely.

Mark: To suit them, because London, it’s some London, San Francisco, they don’t see the appeal. But Marbella or Malaga for that West Coast lifestyle, you can see it making sense.

Sean: Definitely, there’s nowhere else in Europe really that offers that. Because obviously, we’re so much further south than traditional competitors like Saint-Tropez and places like that.

Mark: And also with lower political risk than California, where it sounds like, actually, the political risk for property investment might be higher in California than it is in Spain. I wouldn’t be surprised, but I haven’t done a direct comparison.

Sean: Well, the conversations we have with our American clients, they’re just not happy with the way it’s going in the states, and they’re fearful about the politics of the place, and they’re fearful about the safety of their children. They seem to be the two main drivers, so I think they see Europe as a safe haven, a place that can be explored relatively easily from a cultural point of view, and a tourist point of view. And somewhere that they can enjoy a great lifestyle and climate.

Mark: Well, we’ll just have to see what the numbers look like. By September, we should have a better idea when there are no trees being in their face. But the latest numbers show that the biggest increase in foreign demand in Q1 was American, by a long way. I’m just talking from memory. But I’d be surprised if I got that wrong. And so, we’ll see what the numbers show when we get the full half-year. But I think it’s gonna be interesting to see where the foreign demand, how it carries on throughout as the year progresses, and how it carries on in different regions, and by different nationalities. I think it’d be really, really interesting to see that.

Sean: Absolutely, because there are little micro changes going on, but we don’t know until we get the figures, how they’ve reflected. We go some days where we get a glut of inquiries from a certain nation, and you’re like, “Why’s that?”

Mark: “What happened today?”

Sean: Yeah. Is everyone sitting there watching “A Place in the Sun,” or something? It’s like, “Whoa!” So, things like that happen, and sometimes you don’t know the reason. It’d be nice to see what the patterns are. But Mark, thank you so much for your time and efforts today. Much appreciated as always.

Mark: Likewise, always an interesting conversation.

Sean: It’s always good. We will reconvene next month to talk about as well, I guess we’ll be talking probably, if we leave it a little later in the month, we’ll be able to–

Mark: Yeah, no, we have to leave it until at least the 24th of July, so we know what’s happened in the–

Sean: Yeah.

Mark: Well, I think we’ve done politics. And I hope the message is clear. There’s very small political risk in Spain, but it’s always worth knowing. There’s no harm in knowledge.

Sean: Absolutely.

Mark: And let’s see what the next election brings.

Sean: Perfect, thank you so much, Mark.

Mark: You have a lovely day.

Sean: Bye.

Mark: Bye-bye.

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