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Real Estate Prices Wilt
in Euro Drought
By Roger Munns
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| Europe’s worst
drought in living memory has particularly affected the popular holiday
destinations of Spain and Portugal.
But this could bring reductions
in the prices of second homes, and the autumn could provide a good opportunity
for those considering buying an overseas home.
Spain and Portugal
have suffered one of their worst droughts on record this summer, with consequences
from empty swimming pools for the tourist to economic disaster for farmers
losing their crops and livestock.
Roger Munns,
Managing Director of Tribune Properties, predicts that property prices
in the two European countries could drop as much as fifteen per cent in
some areas as more owners decide to put their villas and apartments on
the market.
‘For many
owners of second homes the original motivation to buy was to have somewhere
they could spend time in a relaxing environment. Coupled with the thought
of a good investment for the future, the market for overseas homes from
buyers in the UK, Germany and Scandanavia has really taken off in the last
twenty five years.
But soaring
temperatures and a strain on the water supply could have
consequences
for their rental returns next year, which many owners rely on to meet their
overseas mortgage.
Many holidaymakers
want to rent a villa with a pool – but the attraction soon goes if the
pool is empty. Some golf courses are having to cut down on watering their
greens too, and it won’t take a big fall in tourism to mean the difference
between breaking even and not being able to meet the mortgage commitments
for some overseas property owners. |
| One of the
world's greatest and most challenging motor-racing events, the Monaco Grand
Prix is the last 'street course' remaining in the Formula One calendar.
- Staged around the narrow, winding streets of Monte Carlo, the attraction
of the Monaco Grand Prix is the proximity of the speeding Formula One cars
to the race spectators. The twisting 78-lap circuit offers countless opportunities
over the 263-kilometre race to witness the thrill of screaming engines,
smoking tyres and the genius of the drivers on a course that allows no
margin for error. - Since the first Monaco Grand Prix was staged
on the 14 April 1929, the fastest average race speed has risen from 80
kilometres (50 miles) per hour to 142 kilometres (88 miles) per hour. |
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'This autumn
could see more properties than usual being put on the market, with a consequential
fall in prices’.
Early warning
signs of a potential fall in property prices have already been seen on
the Spanish Mediterranean island of Menorca, which has enjoyed better rainfall
this year than the Spanish mainland and no water restrictions, but some
villas being cut in price by over ten per cent.
Water restrictions
on the mainland are having an impact on potential villa buyers, with many
questioning the value of a swimming pool when they might not be able to
use it.
Portugal has
recently asked Spain for 6 million Euros in compensation, as water levels
in the River Douro which runs through both countries fell below limits
established in a bilateral agreement,with Portugal coming close to accusing
her neighbour of stealing her water.
Good Time
to Buy - ‘For anyone considering buying a property in Portugal or
Spain, this September and October could be the ideal time to buy’, say
Tribune Properties. ‘Unusually many properties were being reduced in price
in August, traditionally a good month for sales.
"We normally
see villa and apartment prices being dropped mid September onwards when
the tourists and potential buyers are thinner on the ground as some owners
are keen to sell and don’t want to wait until the following Easter before
having a real chance of selling again."
The drought
isn’t the sole cause of property prices falling add Tribune Properties,
saying it has accelerated price falls and come on top of an already poor
year for many estate agents in Europe.
‘A good
barometer for European property are the tax havens of Monaco and Andorra
which don’t rely on ‘tourist’ buyers, but usually have a steady supply
of buyers interested in taking advantage of the zero income tax rate. Andorra
is in the Pyrenees and has no water supply problem – but estate agents
were twiddling their thumbs this summer waiting for buyers to show – and
they didn’t.
Monaco similarly
has had no water supply problems, but has also seen a lack of buyers. The
tourists are still visiting the Principality and hotels in Monaco and Monte
Carlo have been as busy as ever, but again there is a lack of serious property
buyers, and negative property inflation is quite possible in Monaco this
year for the first time in a decade.
With more property
available on the market we would suggest buyers draw up a list of three
or four villas they have viewed and liked, and then suggesting to
the owners that they would consider buying at fifteen per cent below the
advertised asking price to see which ones are prepared to consider it.’
Sea Water - One possible answer
to secure the long term tourist trade and consequential property market
is to follow Malta’s example of building desaliniation plants, converting
sea water to drinking water, sometimes known as ‘reverse osmosis’.
The Mediterranean island competes
with Portugal and Spain for the attention of second home buyers, and has
a healthy tourist industry – despite having no rivers and low rainfall,
allowing the island to function normally even in drought conditions.
The water from this source can be
used for agriculture and ensuring adequate reserves to fight forest fires
for example - it might just be the answer too for the swimming pools and
golf courses – and would allow a plentiful supply of high quality for domestic
use.
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| With more than 300 days a year of
sunshine, residents in Monaco can take advantage of the Mediterranean,
and all of its seaside activities. Moreover, Monaco's close proximitiy
to the Southern Alps, which are only 1 hour away by car, allows for easy
access to the ski slopes. Residents in Monaco, representing 108 different
nationalities, can place their children in different schools which are
either a part of or affiliated with the Ministry of Education. The presence
of communication infrastructures puts the Principality only 2 hours away
from the main European capitals, This same infrastructure allows a dense
population of financial establishments to respond to the demands of an
exacting clientèle. These points combined with the complete absence
of taxation and the climate of total security are what make Monaco such
a haven. |
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For details
of hotels in Monaco, Monaco’s weather, a map of Monaco, the Grand Prix
and direct contact details for the Hotel de Paris, Columbus Hotel and others
visit yourmonaco.com. |
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