{"id":575,"date":"2007-09-26T09:20:00","date_gmt":"2007-09-26T09:20:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=575"},"modified":"2007-09-26T09:20:00","modified_gmt":"2007-09-26T09:20:00","slug":"la-movilizacion-de-activos-es-tiempo-de-efectivo","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/la-movilizacion-de-activos-es-tiempo-de-efectivo\/","title":{"rendered":"Asset mobilisation. It\u2019s time for cash."},"content":{"rendered":"
\"\"<\/a>Hardly anyone now doubts that the property boom is a thing of the past. The evidence of the difficulty in selling properties has begun to make the public aware of something that many of us had already spotted and warned about almost two years ago. Back then, those reluctant to sell their excessive and unsustainable property portfolios argued: \u00abBut what are we supposed to do with the money? The bank only gives us a measly 2%.\u00bb The result of this flawed reasoning: Brick and bag<\/span>, or to put it another way illiquidity<\/span> and risk<\/span> at the mercy of their respective cycles. Many chose to keep walking towards the abyss at the end of the property boom and increase the perceived value of their inmu<\/span>possible<\/span> quarter after quarter. The anchoring effect<\/a> The rise in prices per square metre in recent years had clouded their judgement. They had two subjective reasons for not selling, despite the objective wisdom of capitalising on the final surge to avoid being caught in the impending downturn: the low returns on fixed-income investment alternatives; and the still-rising statistics on prices per square metre. Very few decided at that time to change their wealth management strategy; however, a significant number of our clients did agree to a change of course, although they had to endure several months of pressure and almost mockery from am\"\"<\/a>friends and acquaintances. Today, that pressure has vanished, and they derive a deep sense of satisfaction from discussing the current and future problems of the property market with their friends. Despite our efforts to convince those who sought our advice that it would soon be too late, there were quite a few who insisted that \u00abproperty prices never fall\u00bb. Perhaps they regarded the 1990 crisis as merely stand<\/span>-<\/span>by<\/span> In the property price race, they were too young at the time to take an interest in property prices as investors, or they simply chose to forget all about it.<\/div>\n
The Euribor<\/span> It has risen sharply in a short space of time, but it isn't that high when compared to the interest rate history<\/a> in Europe and Spain. As we pointed out in The Ferrari<\/span>, diesel<\/span>. Fresh orange juice. And the Euribor<\/span> +0,30<\/a>, we may not reach the 10.40% level of 15 years ago, but there is no guarantee that rates won\u2019t rise further. In any case, the credit crisis has made the future of interest rates highly unpredictable in the medium and long term.<\/p>\n
\"\"<\/a>In a bullish scenario of Royal Stay<\/span><\/span> long-term, such as the one that has taken place in the US<\/span>.US<\/span>. Over the last 40 years, the subsequent bear market has been (and will be) much more severe and prolonged than in shorter bull and bear cycles. Furthermore, after 40 years of rises, the aforementioned anchoring effect is far more dangerous, as the majority of the population has never experienced a bear market. Speculation shortens cycles, and perhaps these four decades have been the last of the long economic cycles we may see in a world where speculation has also globalised<\/span>, even in the Royal Stay<\/span>.<\/span> As for the half-point reduction in Bernanke<\/span> (the first fall in over four years) I believe that, with sound judgement, the risk of a credit<\/span> crunch<\/span><\/a> above the risk inflationary<\/span>.<\/p>\n

But let\u2019s get back to the Spanish property market. The feedback<\/span><\/span> which we are currently receiving from those who have been caught out and are still contributing (in the form of interest payments and\/or taxes and various charges) to their oversized<\/span> Property portfolios are similar to those of two years ago. It is true that sellers are no longer aiming for the kind of exorbitant profits seen just a few months ago, but properties are still being put on the market at unrealistic prices. No one ever prepared property investors for the prospect of making a loss; it was the \u00absafest\u00bb investment of their lives. Consequently, those who are not in financial need are entering the market without fully grasping their actual situation. Result: They are not selling. Consequence of this result: Their assets are no longer growing as they should,<\/span><\/span><\/span> since capital gains are now a thing of the past.<\/span><\/p>\n

\"\"<\/a>At a time of crisis in the property market and rally<\/span> When interest rates fall, prices generally fall and the market becomes much tighter, i.e. illiquid. Therefore Only properties that have significantly reduced their prices are being sold<\/span>, and also<\/span> of a lucky few who are benefiting from the inertia of the few remaining buyers under the aforementioned anchor effect<\/a>. The financial strain faced by those who overextended themselves when taking out their mortgages and failed to anticipate the current (and who knows, perhaps future) rise in interest rates will mean that their properties will be the first to come onto the market at lower prices. Consequently, investors with property assets who have not also overreached in the leverage<\/span> Bank-owned properties will be relegated to the list of those properties that sit on the market with no chance of finding a buyer. Why? Quite simply because listing properties at prices from months or even one or two years ago means setting them well above current market prices. Most simply forego the usual profit margin and stick to the prices from early 2006. But the real market price will be lower, although here we must make an exception, as we explained a few months ago: Prime Properties<\/a>.<\/p>\n

Let\u2019s apply to the current situation the arguments put forward a couple of years ago by those who were unwilling to change their compulsive strategy of accumulating property assets:<\/p>\n