A tale of two properties in Barcelona

I don't have to read the newspapers to see that property in Barcelona is overvalued. Exhibit A: the apartment below mine is on the rental market. It's newly restored, is 200 m2 in size (that's about 2000 sq feet, for the Anglo-Saxons out there ;) ), and is going for 2000 euros/month. Exhibit B: the apartment exactly opposite mine on the other side of the street is for sale. It's also newly restored and 200 m2 in size, and is going for 1.27 million euros. These numbers imply that the gross rental yield in the city is about 1.9% per year. That's if the property is fully rented, and without discounting any maintenance, agency fees, taxes, or other expenses. A more realistic net yield might be below 1%. Considering that inflation in Spain is currently running around 3.5%, this means that property rental is a negative return business these days. Consider also that property values are no longer rising, so owners can't count on capital gain to overcome the negative real yield of renting. Finally, consider that for typical Barcelona salaries, apartment rent of 2000 euros is extremely high and out of reach for almost all single and even double earners. This is a new economic reality for Spain, where people have become used to double-digit returns every year in the past decade for owning property. I'm not sure how quickly people will adjust, or even how they will do so.

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Properazzi featured in today's El Pais

A full article about Properazzi was published today in El Pais, Spain's largest newspaper. We appeared both in the print and online edition.

Amazingly, the article is already a little out of date. Since the original interview, our index of properties has ballooned to cover more than 4 million listings in 49 countries. This is the largest index of property listings in the world!

This great press coverage is coinciding nicely with the launch of our latest feature, Properazzi Property News. This a news service that aggregates onto a single platform the best property news from quality sources all over the world. People can find links to great stories in topics including Markets, Architecture & Design, Curious, and Eco-Living. There are some great stories that might otherwise be missed, such as this one on how rents increased by last quarter in Sofia, Bulgaria, or this one analyzing the recent rental subsidies for youth promised by Spain's government this week (in Spanish).


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Congratulations to Telemedicine for its funding!

Great to hear that a Barcelona-based startup, Telemedicine, has received a substantial funding round of 7 million euros from UK VC firm Kennet Partners.

I've heard through the local grapevine that Telemedecine's business is booming. The company was incubated by local investors, and founded by two Swedes.

Link: Technofile Europe: This is the era of telemedicine

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1 in 200 households in Nevada foreclosed last month

Harsh news now coming from the US, where foreclosures are running at double the rate of last year, and are now almost happening at a rate of 200,000 per month.

From what I'm observing in the US, if the reaction to this crisis turns out to be further rate cuts (translation, 'let's inflate our way out of this problem'), then I think the trade of year in 2008 will be to short the US Dollar. Considering the currency is already so weak, this could be far scarier than a lapse of liquidity in the mortgage bond markets.

Given the choice between seeing some banks and builders go bankrupt during a few years of painful unwinding, and triggering hyperinflation in the world's largest economy, I would much prefer the former.


Link: U.S. Foreclosures Rise Sharply in July: Financial News - Yahoo! Finance

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Sloppy writing in the Observer

The first paragraph from this article in yesterday's Observer about Fed intervention in financial markets:

Federal Reserve chairman Ben Bernanke could be forced to cut US mortgage rates within days if Friday's rally on Wall Street fails to contain the fallout from the lending crisis.
What??....This is some really sloppy writing; Bernanke can't "cut US mortgage rates"; and how is a rally in Wall Street meant to "contain the fallout from the lending crisis"?

This is writing that reminds me of the spam-blogs, where robots steal content from real blogs, mix it up, and republish it on fake blogs. Such fake blogs from a distance look legitimate, but are really just a mish-mash of ideas that make no sense whatsoever. Just like this article's first paragraph.


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What are Australian media up to with European online real estate?

UPDATE: In the end Deutsche Telekom ended up buying the whole of ImmoScout. It was a pre-existing shareholder, and my guess is that they exercised a right of first refusal to PBL's offer. At least this outcome seems much more logical, although it's a bit boring: is a state-owned telephone monopoly really the best owner for a booming, successful real estate portal? Link: FT.de (in German) Also commented on today by Jesus Encinar on his blog (in Spanish) In the past couple years in Europe, most of the large 'web 1.0' survivors in online real estate have been realizing exits through acquisition or IPO. One of the major acquirers has been Rupert Murdoch's News Corp, through its controlling stake in Australia's online leader realestate.com.au. They have entered Europe by buying the UK's Propertyfinder, Italy's Casa.it, and Luxembourg's AtHome.lu. So it was pretty weird to see one of the last remaining big national players, Germany's Immobilien Scout (aka ImmoScout), rumored to have been 'in play' for a while, finally sold to PBL..........who??? Exactly. PBL, it turns out, is one of Australia's largest media companies. It's publicly traded, and has interests in magazines, TV, gaming, and increasingly, online media. A sort of mini-News Corp. But without any meaningful online real estate holdings. Except now, this Aussie firm controls the leading real estate website in Germany. Although it could be a purely financial investment, it rather looks like some kind of chess move as it now controls a very important asset that effectively blocks News Corp's roll-up of Europe's online real estate sector. My guess is that PBL bought ImmoScout to use as a future bargaining chip to trade against some other asset they would want from News Corp.

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Google buys Spanish startup Panoramio

Panoramio is a great product, a very cleanly designed google maps implementation of geolocated photos.

Congratulations, guys!

link

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Nokia CEO talked about us yesterday

Nokia CEO Olli-Pekka Kallasvuo was in Madrid this week for the ExpoManagement conference, and mentioned us in his speech. Here's the relevant excerpt:

...There’s an interesting example of this right here in Spain. It’s a real estate service, based in Barcelona, that’s called “Properazzi”. Say you are interested in buying a new home. You know the general location, and the approximate size and price range of the house you would like to buy. And, like most of us, you own a mobile phone. This service provides an Internet-based search engine that can quickly help you find the property you’re looking for. There also is a start-up called “Widsets,” which it just so happens was created by Nokia. It’s an Internet service that allows people to create and direct personalized feeds of web content right into their mobile device. So you now can create your customized search, connecting you to the most up-to-date information on the continent’s largest database of property listings, and receive it directly into your mobile device, wherever you are. You never have to open an Internet browser, and you never have to turn on your desktop PC...
This is related to the interesting work we've been doing with Widsets, a Nokia spinoff that has a really innovative platform for mobile widgets.

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Properazzi 3rd in Startup competition

Yesterday Properazzi came in 3rd out of a pool of 250 companies in a competition to find innovative European web2.0 startups. The final was held in Bilbao; although it was raining, we were inside the fabulous Guggenheim museum for the presentations. It was a fun trip, and congrats to the 1st and 2nd place teams from Sclipo and 5min. They're both video sites focused on skills, but have very different products and target markets. All three winners come from cities on the beach with great food and climate (2x Barcelona and Tel Aviv); was the jury making a statement favoring a kind of lifestyle? :)

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three interesting links...

A few interesting items you might have missed:

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