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Real estate investors are well aware that every investment carries some risk. However, real estate experts say that property investors in Euro Zone countries should be asking for increased risk premiums due to risk exposure that is likely if a country leaves the Euro Zone and returns to sovereign currency. Speaking at a seminar at the EXPOREAL real estate trade fair in Munich, Germany in early October, Patrick Artus, Global Chief Economist at investment bank Natixis, “The sovereign debt crisis in the eurozone has driven up banking risk and corporate risk, creating an environment characterised by high risk aversion, abundant liquidity and sluggish growth in the OECD countries. We believe, however, that at the brink of the precipice the EU will muster sufficient financial firepower and political will to refinance the banking system, allow an ‘orderly default’ of Greek debt and prevent the break-up of the eurozone.” Sylvain Broyer, Deputy Chief Economist at Natixis, added that: “the abundance of liquidity is only benefitting safe haven assets, including gold and a select few government bonds. This category doesn't include emerging market assets, for example. Despite this less than optimistic view of property investment, in fact Natixis offered the following schedule for risk increases: · France and Belgium – 10 basis points (bps) · Italy and Spain – 50 and 90 bps respectively · Greece – 375 bps Investment in Spanish property is on the rise. Ben Walker, Sales Manager at PropertyInSpain.Net, a company that deals in distressed properties said: "We have more than 3,000 registered buyers looking for bargains and generous mortgages. The increase in activity in the last quarter of 2011 suggests that many of these mañana buyers have decided to make their move while the choice of well-located, well priced properties remains good. Some banks have already announced plans to withdraw the 90% and 100% LTV mortgages that have boosted sales during 2011 and having dispatched poor quality property into their bad bank divisions, prices on the remaining better properties are likely to stabilize or increase during 2012.” The most hesitant buyers have been from the UK. But as reported on December 12, 2011, that appears to be changing. The UK economy is distressed, with little investment opportunity; the Sterling is strong against the Euro, interest rates have declined and other European rain belt investors are snapping up the best deals. These factors appear to have spurned interest for British investors to look seriously at investment property opportunity in Spain. However, time may be running out to get the most advantageous deals. Some banks in Spain have already announced that they will be ending the 90 percent and 100 percent LTV mortgages that resulted in higher sales during 2011 and prices on the better properties that have not yet been purchased appear to have stabilized and could increase during 2012. Spanish real estate experts note that some properties have been discounted up to 70 percent. These properties could see equity gains in as short a time as 3 to 5 years if Spain's newly elected People’s Party Government continues policies designed to grow tourism to Spain, already one of the favorite vacation spots for Europeans. Walker said the market was doing extremely well and that: "It took just 15 days to sell 26 key ready 3-bed golf villas with 100% mortgage priced from EUR 140,000 listed on the PropertyInSpain.Net website. Just one villa is available at EUR 175,000, on a bigger plot overlooking a large communal swimming pool and a 27-hole golf course."
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