Spanish Property Market Current Issues

Spanish property scam cost investors millions

A businessman is at the centre of a Government and police investigation into a suspected £43 million overseas property scam. Colin Thomas of Town Hill, Yoxall, is currently being investigated by Staffordshire Police and is also facing legal action from the Insolvency Service following the collapse of his company Ocean View Properties.

A spokesman for Staffordshire Police said: “Following the collapse and liquidation of Ocean View Properties International Ltd, Staffordshire Police is in receipt of a number of complaints alleging fraud against the company.”

The Insolvency Service is understood to be about to launch disqualification proceedings against Mr Thomas and other bosses of Ocean View Properties. In a separate but related development, a class action lawsuit to recover money on behalf of dozens of Ocean View victims was filed by a Spanish lawyer in Madrid on Friday.

The criminal claim for fraud and misappropriation of funds against the directors of Ocean View was lodged in a Madrid court. The prosecuting lawyer is seeking more than £6.5 million in damages for 70 claimants.

The company, whose founders included a convicted fraudster, used the likes of England footballer Gareth Barry and television property expert Martin Roberts to sell luxury apartments in Spain. It took deposits worth around £80,000 each from British investors, but much of the cash disappeared as the homes failed to materialise.

Zapatero reforms increase Spain market confidence

Spanish Prime Minister Jose Luis Rodriguez Zapatero’s moves to overhaul banks while changing rules on labor, pension and wages may do more to stem the debt crisis than European plans to reinforce its bailout fund. Zapatero’s cabinet plans to pass new rules for job seekers today, two weeks after approving a draft bill to raise the pension age.

By the end of the month it will pass a decree to bolster lenders’ capital and in March aims to loosen collective- bargaining rules to make it easier for Spanish firms to compete. Spain, emerging from almost two years of recession, is trying to convince investors it can shore up its struggling savings banks without overburdening state finances and having to follow Ireland in seeking a European Union bailout.

The gap between Spanish and German borrowing costs is more than 10 times the average in the first decade of monetary union, even after easing by a third since Ireland’s rescue in November.
“The working assumption of more and more analysts in Europe is that Spain will be able to pull through on its own,” said Gilles Moec, co-chief economist at Deutsche Bank AG in London. “A lot of that has to do with what they’ve been doing; there’s a lot of market talk about Zapatero’s epiphany.”

Banks’ exposure to property could prove Spain’s downfall

They are officially banks but they have become Spain’s main real estate agents, according to data from the country’s banking sector which reveals the extent of their risky property assets. The Bank of Spain had asked all 17 of the country’s fragile regional savings banks, which account for about half of all lenders, to supply it with details of their exposure to the collapsed real estate market.
Unsurprisingly, the savings banks held far more risky assets than the main banks, based on a calculation of the figures last week by AFP. The nation’s seven main banks held 45 billion euros ($61 billion) in risky assets and the 15 of the savings banks that have so far published their figures had around double that, or 90 billion euros.

The difference is due to the huge amount of mortgage loans — some 164.9 billion euros worth — that the savings banks handed out during the property bubble, whereas the main banks only issued some 77.5 billion euros. The savings banks are at the heart of market fears that Spain could need a bailout like the ones granted Ireland and Greece last year.

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