Spanish Property Auction Flop Brings Down Gavel on Housing Boom
Madrid is becoming the focus for an auction on Properties in Spain. Bloomberg news pusblished this story:
April 4 (Bloomberg) — Thanks to Spain’s slumping property market, house buyers are as popular as movie stars — and they can cause even more excitement.
Reporters outnumbered bidders as lot No. 1 hit the slate in Europe’s first “Dutch auction” for real estate last weekend in Madrid. Of 216 lots, 194 were withdrawn when they weren’t purchased at the reserve price. One man, investor Manuel Sainz, bought almost half of everything sold.
“Next stop Hollywood!” laughed Sainz, head of property company Las Terrazas de San Blas SA, as he fought off the press after buying 10 properties at discounts of as much as 30 percent.
The event shows the depth of Spain’s housing bust after prices tripled in the past decade. In January, the government’s housing policy director, Rafael Pacheco, called the slowdown “moderate and orderly” after January sales volume fell 27 percent from a year earlier as the global credit shortage forced banks to reduce lending.
“Official figures are one thing and reality is something else entirely,” said Alberto Espelosin, a strategist at Zaragoza, Spain-based Ibercaja Gestion, which manages $12 billion. “It’s really difficult for people to afford a home with the credit restrictions.”
For Tulipp Showrooms and Auctions SA, set up in September, the Madrid auction was the first in a series of monthly events taking place in Malaga, Barcelona and London over the summer.
Dutch Auction
The Dutch auction, developed in 17th century Amsterdam after the collapse of the tulip bubble and used today to sell fish in Spanish ports, starts with the seller’s asking price and then moves down until the property finds a buyer.
“Six months ago if people made an offer below the list price then developers took offense,” said Tulipp managing director Jorge Zanoletty, whose father established Spain’s first regular property auctions 16 years ago. “Now they are in the mood to be more open.”
