News that billionaire Bill Gates has acquired a 5.7% holding in Spanish builder Fomento de Construcciones & Contratas SA (FCC) has certainly caught the attention of property investors around the world. The 5.7% stake cost Bill Gates $155 million and led to an immediate increase in the share price of FCC . However, is it time to follow Bill Gates into the Spanish property market or should you remain on the sidelines?
The property market in Spain has been very much in the news of late amid concerns that activity is falling dramatically and prices are still under pressure. The short term outlook appears to be gloomy but perhaps Bill Gates has seen something which nobody else has yet realised?
Those who follow the Spanish economy will be well aware that gross domestic product increased by 0.1% during the quarter to the end of September. This increase is the first since 2011 and in the eyes of many people could signal the start of a slow but sure upturn in the Spanish economy. When an economy such as that in Spain has been under so much pressure it is understandable that some investors are “grasping at straws” but the facts remain that the short-term outlook for Spain is still very depressed.
Quote from PropertyForum.com : “I read an article that if I buy a home that costs about $200,000 U.S.D. I’ll get automatic Spanish Permanent-Residency which I imagine will lead to Spanish citizenship after a few years even though I’m not European.”
Youth unemployment continues to rise, property prices are under pressure and, as we have mentioned on numerous occasions, an array of Spanish banks are holding default properties which they will look to sell on the open market in the short-term. There are rumours abound that these unwanted properties will be sold at “any price” with Spanish banks in desperate need of further liquidity after being bailed out by the Spanish authorities.
Expat property owners
Interestingly a number of the more popular expat locations across Spain have been hit very heavily by the property downturn and the economic troubles. Many expats have indeed sold up and moved back to their former homelands amid concerns that the European economy could take many years to recover while the UK for one seems at the moment to have avoided the worst of its European counterparts.
However, the trick to long-term property investment is just that, looking long-term and trying to ignore the short-term fluctuations which are difficult to forecast. If you’re looking 10 years, 20 years or more down the line then you could argue that Spanish property prices at this moment in time look extremely attractive. Whether or not they move further down in the short to medium term is difficult to say but it does not look as if we will see a short-term bounce in property prices.
Bill Gates investment portfolio
While $155 million is an enormous amount of money by any anybody’s standards, when you are a billionaire such as Bill Gates you can afford to take long-term positions and in many ways ignore the short-term fluctuations. The fact is that Bill Gates has recognised what he sees to be long-term potential in FCC and with the best will in the world you will never buy at the bottom of the market.
Unfortunately, very few of us are in a similar situation to Bill Gates and we may well need to see a rebound in property prices from eventual lows before we feel comfortable investing again. If you can take in the fundamentals today, you believe there is value in the Spanish property market and you can ignore the short-term fluctuations, perhaps it is worth looking at Spanish property again?