| The Spanish territory is governed by semi | | | | the average price of property has declined in |
| autonomous communities. And every community | | | | 2006 by eight percent ([ The same study |
| consists of a number of provinces. Andalusia is | | | | predicts a further increase of the prices again in |
| such an autonomous community and Malaga is | | | | 2007. Both these leads should be handled with |
| one of the provinces. The variation in economic | | | | care however. A decline in the average price level |
| activities in Malaga is limited. The construction | | | | presented by a real estate consultant is quite |
| sector absorbs thirty percent of the internal | | | | exceptional. But the appended message that the |
| product. Tourism is traditionally the most | | | | 2007 price level will show an increase again |
| important sector in Andalusia and even more | | | | (although a single digit increase) is more suspicious |
| important in Malaga. This means that two | | | | or at least speculative. |
| economic sectors represent more than the half | | | | There are many factors that make the (near) |
| of the economic portfolio in Malaga. | | | | future price level uncertain. The changes in the |
| There is no need to compare such a situation | | | | tax law for example one that facilitates foreigners |
| with investment portfolio management to | | | | a lower tax rate when selling their property. |
| understand that any economy that is based | | | | Another is the rising interest rate that is affecting |
| merely on two sectors is vulnerable. | | | | house owners and the third factor is the low |
| The vulnerability is even higher if we take into | | | | salaries in Spain from which the mortgages should |
| account the correlation between the two sectors. | | | | be financed. |
| One of the trends in tourism is that residential | | | | But the best indicator about the economic |
| tourism is taking over a part of the traditional | | | | situation in the south of Spain comes from the |
| tourism and this trend is very much linked to the | | | | construction sector; the simple fact that |
| same construction sector. The finance sector is | | | | construction is a leading economic indicator. Just |
| another that is linked to construction by the | | | | observe some main real estate corporations on |
| supply of mortgages. Altogether this constitutes | | | | the stock exchange. METROVACESA for |
| one significant economic and powerful core. There | | | | example has more than doubled its value in 2006 |
| is only one main issue; economic stability. | | | | (from about 50 euros to 130 currently). |
| Recently, the Marbella Fraud investigation has | | | | Construction is a leading indicator. Management |
| revealed that a percentage of the properties | | | | and investors decide to construct when economic |
| have been built without the necessary licenses | | | | perspectives are still positive or when they turn |
| and permits and are now flagged as illegal. | | | | more positive. And for a long time the economic |
| This is only one part of the risk that gets | | | | foresight have been positive. And so are the |
| revealed on the top of the market. A recent | | | | expectations. At the same time the risk level |
| survey of a real estate consultant showed that | | | | increases... |