May 2013

Hello again. When I was at College in the seventies I went through something of a financial crisis. In those days a bank loan for a student was a pretty rare commodity. I already had a job but it wasn’t going to pay the bills. So I did the unthinkable, I sold my record collection. Lost forever my “Made in Japan” by Deep Purple, Hendrix’s “Electric Ladyland” and about 60 other top albums.

I was reminded of those dark days when I read this month of new figures showing the stock of unsold housing in Spain stands at 3.4 million. The vast majority of these properties are held by banks repossessed through failing loans. These houses, like my old record collection, represent an opportunity. We know that the average value of a house is 1,400€ per m² and that the average size of a recently built property is 97 m². That makes the total value of housing stock approximately 462 billion €.

At a time when Spanish banks are in desperate need of cash it is time to stack em high and sell em cheap. If we estimate that at least one third of these properties are in places that would appeal to retired people from overseas then the possibility of raising 100 billion € in direct foreign investment becomes a real possibility. This is three times what the eurozone injected into Spain to recapitalise 4 banks last year.

Add to that the furniture sales, car sales and money spent in restaurants etc. and we could see a real kick start to the economy.

But will overseas investors risk buying an illegal house? Surely this is a golden moment for the Rajoy government to act decisively to end the crisis of confidence in the legality of Spanish property. Isn’t it?