The Low Risk Property Market Everyone Is Talking About

Spanish PropertyI went to Spain for a holiday this year, the first time I had visited the country for a beach break. I took my family with me and we had a great time playing in the hot sun, watching the waves crashing onto the beach and collecting pebbles.

My nephew, who is just at that age where all this is new, likes to build sandcastles. He would sit there for hours with his blue plastic shovel and matching bucket, building the castle as tall as he could make it.

I helped him build the moat and put a bit of shape into it so that it wouldn’t collapse and added in some pieces of twigs and shells we found to make it look like a handsome fortress. To his delight, we had created a great castle.

He then went back to towards the waves crashing against the shore, picked up the bucket, filled it with water, then poured it onto the castle.

That’s toddlers for you.

This got me thinking, kids don’t really worry too much about things being knocked down. Their thinking is that it can always be rebuilt another day.

By the time we reach adulthood we often build up our own versions of these sandcastles. Only these sandcastles are built on the foundation of financial forecasts or perhaps an investment in property.

The problem is, as we get older some of us lose the connection with basic wisdom that the world is governed by cycles, not what happens in the short term. The world seen through a child’s eyes is very different to the one seen through an adult’s eyes because they are not distracted by what might happen, their only concern is what happens now.

My nephew was delighted when that sandcastle was built; he also knew that this sandcastle wasn’t built to last. This didn’t bother him in anyway, he could always build another one tomorrow so he wasn’t afraid to knock it down.

In some ways property markets are like sandcastles. What we are seeing in Spain at the moment are developers desperately holding on to their valuable property. They are trying to stop the inevitable tide coming in to sweep it all away or preventing Mr Bank Manager coming along with his own big bucket of cold water.

Their greatest fear is that the good times will never return and nobody will ever make money from property in Spain again. This won’t happen – property markets are driven by cycles just as the waves that crash onto the shore and can sweep away a sandcastle, there will be times when economic tides roll in and a market crashes.

Everyone is talking about Spain at the moment, if it isn’t the general strike it’s the bailout and this is making developers very nervous. More than half of all Spanish property developers may be in danger according to Jones Lang LaSalle.

So in a bid to hang onto to their Spanish coast properties, they are stubbornly gripping on to their buildings and willing to agree to the kind of offers that will save them from the tide. This is the time when property investors will get the best deals.

The best investors know that eventually things will turn around, they know the cycle will start again so they don’t worry. Like the child building the sandcastle, they take a relaxed, long term view on things and don’t worry themselves with risk today and miss out on all the fun tomorrow.

Are you worried about investing in property? Please leave your comments below:

Kind regards

Brett Tudor
Property expert

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