Luxury Real Estate Market in Europe Remains Stable Says Pravda

I often seek out news reports from other countries, some of them in foreign languages and some in English, in the hope of finding something positive to report, and today I can manage to do that. Although the statistics and conclusion are somewhat suspect I am afraid, it is still good to be able to write a positive headline for a change. In what has to be one of the most staggering displays of unbridled optimism in the history of positive spin, I have just discovered that the European luxury property market has not been affected by the financial crisis. No really – completely unaffected with prices still guaranteeing positive gains throughout the sector all over Europe.

Jens Fischer of Pravda, the Russian online newspaper is proud to announce this fact with a few statistics to back it up. Here are a few choice quotes for your amusement:

Whilst prices in many regions and countries in Western Europe for standard houses have dropped up to twenty-five percent in 2008, which applies to almost all countries in Western Europe, the luxury market remains relatively stable. No substantial consolidation can be seen here, nor do experts expect a consolidation period to come during the next months.

The luxury sector remains stable, in particular the Greater Zurich Area and Geneva in Switzerland, Tyrol in Austria, the Munich area in Germany, the Côte d`Azur/Provence area in France, the Balearics and the Marbella area in Spain, Northern Italy including the Portofino area and Sardinia and, all things considered, London and surroundings in the United Kingdom.

According to the World Wealth Report 2007, conducted by Merrill Lynch and Capgemini, there are 9.5 million high net-worth individuals in the world up from 7.2 million in early 2003, who qualify as potential buyers of luxury real estate.

Investing in the right place in the right property will, on the one hand, still guarantee an annual return on investment, that is above average compared to earnings from interests, stockmarkets and commodities, and on the other hand nowadays is safer than any other kind of investment.

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Much as I hate to rain on anyone’s parade (not true), I feel I must break some bad news to you Mr Fischer – London luxury property prices fell 20% last year and are continuing to decline rapidly. I personally can introduce you to a Russian aluminum magnate who will sell you a villa in Italy, just over the border from France’s Cote D’Azur, that was bought last year for E 3.5 million that he would cheerfully take E1.5 million for. Roman Abramovich will sell you his yacht Pelorus for any sensible offer, and the previously mentioned aluminum magnate has already taken his boat out of the water and fired all the staff.

UBS Bank of Switzerand’s shares fell again today after the SonntagsZeitung reported  they had made $7.2 billion in losses in Q4, bringing their total losses for the year up to almost $20 billion; the biggest Swiss corporate loss on record. No comment from the bank apparently.

Hardly seems worth discussing Marbella, but there are now a few “interesting,” property scams coming to light in the Spanish markets. A British politician is calling for an equiry into Ocean View Properties, a British property company that transferred £100 million to a Spanish developer which then evaporated (the money not the developer). The deal was apparently brokered and arranged by convicted fraudster Sean Woodhall, who conveniently disappeared in a light aircraft crash in Brazil last May. No bodies were recovered, but the Spanish developer claims to have paid back the money. There have been a lot of these recently – last month alone Fortuna Estates were busted for land fraud and Aifos, a Marbella-based developer was forced into recievership by one of their creditors. The owner and Managing Director of Aifos were both arrested for fraud some time back, but the failure of yet another developer Tremon apparently prompted the proceedings. Unravelling the mess of the Spanish property markets  is going to take years.

These, of course, pale in comparison the the Madoff scam and the Indian fiasco involving PricewaterhouseCoopers.