Trouble Ahead for Polaris World

Polaris World cropped up again in the news recently – this time in The Guardian. It’s gloomy reading for anyone thinking about buying a property in Spain. Like most of the world, the credit crunch is hitting home – and the property market, where investments represent a huge proportion of income, is feeling the pinch the hardest.

Of course, when times are tough at home (and inflation seems to be on the rise to add to the well documented slide in property prices) then people are naturally reluctant to embark on an expensive venture in overseas property markets. This is reflected in the reports of falling prices and empty properties. Despite all this, Polaris World themselves are keeping a brave face on things. Is this justified?

In the short term, it has to be said that “probably not” is a fair assessment of things. With banks unwilling to lend to buyers due to a lack of liquidity in money markets, and house prices falling, the number of people with the means to buy abroad is shrinking rapidly. This problem is compounded by the sheer scale of Polaris World’s developments. With so many properties either still under construction or unoccupied the traditional rules of supply and demand come into play. In this case: too much supply, allied to too little demand. That puts downward pressure on prices, and the anecdotal reports apart prices in the Guardian article ring true.

However, amidst the doom, it is important to remember some fundamentals.

Firstly, the reason the market in Spain has boomed so much over the last decade is down to demand. People aspire to a life in the sun and Polaris World offer a great way to do that. The model offers the chance to buy a property, live there for a few months each year and turn it into a rental stream through letting for the rest of the year. That also hasn’t changed.

Secondly, the developments themselves are high quality, well-situated and well served by a fantastic array of facilities. That is a strong differentiator from other property options, which perhaps demand renovation or village life that while aesthetically pleasing is not to everyone’s taste. Added to this mix is the enormous popularity of golf – which continues to experience boomtime as a leisure pursuit.

Despite all that, Polaris World will be unable to buck the wider trend to falling prices over the next year or so. Perhaps counterintuitively, that might make now a good time to get into the market. In the longer term, prices should rise over and above the market in general thanks to the strong factors built into the proposition. As people get jittery and sell at values below the market average, logic dictates that the prices currently being bandied about represent real bargains for those with the stomach to sit tight through the credit crunch.

Whatever decisions the markets make, these are interesting times for the Spanish property market in general – and Polaris World in particular.

Economic Downturn?

The Times carried this downbeat article about tougher times in Spain’s economy. It is often said that Spain’s economy has been fuelled by British expats investing heavily in the property market there – and a lot of the comments on the piece take that line. Actually, that oversimplifies the Spanish economic experience tremendously and reflects the overweaning belief amongst some commentators that Britain still has way more influence than is actually the case!

Orders for Polaris World properties remain high, and the company are ploughing ahead with new developments, so the picture is more nuanced than you might think. As ever, for quality developments with good planning, infrastructure an facilities demand remains high. A lot of the lower end developments – stuck in the middle of nowhere with no ‘added value’ features – it is true that the picture has suddenly darkened greatly for them. But otherwise, Polaris World (for all its documented problems) remains a fundamentally sound investment for the medium-long term.

He’s Back!

Here comes Jose Luis Hernandez once more in another stylish suit – and some winning hand-gestures. I’m sure the marketing company they use must be sniggering behind their hands every night. On the plus side, the ‘ferrero rocher effect’ is pretty strong here. That’s a phrase I’ve just this second made up to describe those woeful ads that everyone remembers on the basis of their woefulness.

The Shadier Side…

It is true as this Guardian article attests that the property market in Spain is beset by some of the problems that are endemic on the fringes of the Med. Whilst not quite the lawless frontier that is sometimes portrayed, local bureaucracies can and do have a massive influence in the planning process for new developments.

Naturally, this does lead to corruption. The prestige and money represented by something like a major new resort development attracts sticky-fingered politicos, lawyers and developers like a honey pot attracts bees. This sometimes becomes an unholy alliance with nods and winks being used to bypass proper procedure.

In the long term, this represents no gain for anybody except the lawyers. The politicians are inevitably undone if they overtly or covertly conspire to bend regulations in favour of developers. The developers themselves can get a bad name from their association with such cases. The local residents lose out – because if rules are bent it is normally to their detriment. Finally – and most frequently left unremarked upon – the people who have invested in the development lose out. The goodwill of the local population is absolutely essential for life to be bearable either for holidaymakers or people looking to live out there permanently. Looking like you’ve just beamed in from Croydon with a perma-tan and trophy wife to live in splendour on some poor guy’s olive grove that was bulldozed without permission just isn’t a recipe for successful integration.

If this kind of thing is going on, it is short-termism of the worst kind – and the well documented rough-ride of the Spanish property market  as a whole will not be helped.

Scale…

Hacienda Riquelme from the air

Originally uploaded by charles.prendergast

When I wasn’t moaning about airports, I got this pic from the guys at Polaris World and I think it shows pretty nicely the scale of the developments they are creating.

This is Hacienda Riquelme – one of the more recent developments (hence it’s currently ‘under development’ status) and one of the prettier ones. The apartments, I think, are the kind of thing that makes this resort stand out from a lot of new builds in the region. The architecture is very much in keeping with the feel of the local area.

Some people complain that these developments interrupt the fabric of the local landscape, but I think the sympathy of the architecture (plus the addition of much needed greenery) is quite in keeping with what you would expect from Murcia and I think such complaints are churlish.

Anyway. Now you know!

An off-topic rant: tin pot airports

Leeds-Bradford International Airport. The arse-end of airports as far as I’m concerned. One step up from the tarmac-strip-and-dusty-tin-shed airports you get on some of the Greek islands but with pretensions to be some kind of massive hub.

I know that Leeds is a booming city but it just ain’t – with the best will in the world – Paris (or even Manchester). Despite that, the airport traditionally had a little bit of charm. Instead of the usual “Food Court” offering, it had a pub with some fantastically natty 70s tiling (that might even have been designed by some school kids) showing various aspects of Yorkshire. Greyhounds… mining… all that.

Anyway for all it was a bit lame, at least it was different. Alas, it has been swept aside in favour of one of those Know No Boundaries collection of chain outlets and a space full of lightweight, uncomfortable furniture, bathed in flourescent tube lighting. No charm. No character.

And unfortunately, the space just isn’t big enough. You move your chair and clatter into another one… threading your way between the tables with a tray of coffees is a sisyphean task. Arrgh. If you’re going to go down the whole ‘maximum output per square foot’ approach to catering for bored passengers, at least put ‘comfort’ somewhere in your list of requirements. Here’s a tip, bozos: I would spend 3 or 4 times as much on food and drink if I could spend more than 15 minutes there with any pleasure.

Rant over.

Laughs!

This made me chuckle! Not a problem in Spain. We’re more concerned about donkeys getting thrown out of belltowers and endless siestas (*rolls eyes*).

It is actually amusing how stereotypes stick in the mind. Amusing, that is, unless you’re trying to create a positive image of a region or country. Somewhere in Spain, I’m sure a guy is trying to drum up a picture of Britain to shift a load of city centre apartments in Nottingham and trying his best to dispel the image of an economy based on drunken stag nights.

I suppose that is one thing that Polaris World has going for it at the moment – popular perceptions of Spain remain pretty good (as evidenced by the increasing number of Brits who relocate here – 761,000 according to the BBC)

Island Living at Polaris World

Although I dig all of the Polaris World resorts for differing reasons, I think La Isla del Condado offers the clearest vision of how Polaris World should be developing resorts. Taking off my marketing head for a minute, and just between you and I, Spain is groaning under the weight of developments pitched at expatriate Brits and holidaymakers.

Although the golfing angle is still fairly unique, it is the quality of the apartment builds themselves that will ultimately create a successful environment for investors and purchasers alike. La Isla Condado – a development based on an island – is typical of the things that Polaris World need to do if they are to continue to grow apace or ahead of the Spanish market in general (there’s some imagery of the development here).

People are always striving for something aspirational when it comes to property – be that the ultimate in seclusion (a log cabin atop a rocky mountain peak) or some outward show of luxury and contentment. By building a development on an island format, Polaris World are playing with one of the holy grails of overseas property – waterfront apartments. Sea views of any kind create their own premium, and developing on land that is effectively all seafront is a very shrewd way of playing to investor’s subliminal instincts.

*Those* Adverts…

When I saw the most recent TV ads for Polaris World I pretty much threw my hands up in the air. Instead of the light, jokey tone established by the old ads with Jack Nicklaus they’ve gone for a guy in a white suit ‘selling the dream’ over some awful cod flamenco music.

The guy in question (Jose Luis Fernandez) has done great things for the company, but in todays’ market I can’t help but feel that a sincere guy in a suit is setting completely the wrong tone for the company. Do I need to say that, rightly or wrongly, the British public have scant time any more for corporate blandishments from guys in suits? And white suits? And Spanish guys in white suits?

I can’t help it. A thickly accented Spaniard in a white suit just isn’t sending me the right vibes. I’m not as young as I was, but Polaris World are in this for a the long haul (you can’t develop thousands of acres of Spanish countryside unless you are pretty serious) and therefore they need to be appealing to tomorrow’s buyers. That means hitting people as they reach their late 20s/early 30s and start to mull over their ‘lifestyle options.’ What Polaris World out to be doing is showing the fun and the excitement, the money and The Sex that people are having out in Murcia.

I can’t help but feel that they’re missing a hell of a trick with this campaign. I know the 80s are back in a big way – robot dancing is massive on YouTube – but these ads are 80s in a completely horrible way… phrases like “sloane rangers” and “yuppy” swim out of the recesses of my memory when I’m watching them.

Still – you can’t have everything right all of the time. Just shoot the marketing company and all will be well!

Check out the vid on YouTube and see what the kids are saying in the comments…

An Introduction

This is a *very* unofficial look at Polaris World – the exciting range of golf resort developments in Murcia, Spain that have been heavily promoted on TV for the last couple of years. They are a particularly good investment opportunity and a decent place to visit if you’re interested in knocking a golf ball around in the sunshine.

“Golf” and “property” are two very hot subjects right now. Even though the stormclouds are gathering on the domestic property market, people are still looking to buy overseas. In fact, that may actually be a symptom of the problems with the domestic market. With the economy looking increasingly fragile (thanks Gordon!) the prospect of packing up and moving to Spain – where even if you are poor at least the sun shines – is quite attractive.

As for Golf? Well, golf is enjoying a considerable renaissance in popularity as it becomes more democratic. The days when the very word ‘golf’ summoned up Jaguar drivers blackballing women from drinking in the bar are disappearing rapidly. Hell – the world’s number one player is black these days!

Against this kind of backdrop, Polaris World represents a very good investment. Over the course of the next few months, I’ll be bringing you an inside view into this attractive opportunity and what it might mean for you in terms of return and/or lifestyle!