Happy San Jordi’s Day! I’ve gotten neither a book nor a rose, which kind of sucks, but I’m trying to keep upbeat.

For those you outside of Catalunya, Sant Jordi (”Saint George’s Day” for English speakers) is a special day, similar to Valentine’s Day, but not quite as commercial. All around the streets of Catalunya, there are small vendors with small, folding tables selling roses and books for a few euros so that couples (or friends or even bosses) can express their love for and appreciation of one another. Women walk around town with roses, men show off their books and everyone enjoys the beautiful springtime weather.

Sant Jordi’s Day is the Day of the Book and the Rose in Catalunya, and celebrates a martyred Roman soldier who was decapitated when he refused to kill Christians. There are popular stories of San Jordi and a dragon. Through a random lottery, the king’s daughter was chosen to be given as a sacrifice to a dragon that was terrorizing the village of Montblanc, but San Jordi arrived just in time to kill the dragon and save the beautiful princess.

Giving roses in celebration of San Jordi has been done at least since the Rose Fair began in the 15th century. The book part came into effect around 1930. April 23 was chosen as the official day in Catalonia, because it was the day on which Cervantes and Shakespeare, among others, died. Quite logically, it’s also the accepted date on which San Jordi died in 303 AD.

Speaking of love, Mariah Carey is the queen of the love song, and I’m really loving her new hit, Touch My Body. It explains what happens after you’ve given your partner the rose or book for San Jordi’s day. Touch My Body was the number one song in the US for the last couple of weeks, only recently replaced by Leona Lewis’s Bleeding Love. In addition to the mellow beat and sweet vocals, I like the reference to a web 2.0 start-up. It gives me something to which I can aspire.

First, Mariah tells her lover how she feels about him:

I know that you’ve been waiting for it
I’m waiting too
In my imagination I’d be all up on you
I know you got that fever for me
102
And boy I know I feel the same
My temperature’s through the roof

But then being the paparazzi-stalked star that she is (when she’s not begging for media attention, that is), she warns her lover not to try to embarass her on the Internet:

If there’s a camera up in here
Then it’s gonna leave with me
When I do (I do)
If there’s a camera up in here
Then I’d best not catch this flick
On YouTube (YouTube)

That’s when you know that you’ve hit the bigtime. Not when you get paid $1.65 billion for your not even 2-year old start-up. Not when important bloggers and analysts note that you dominate your category more than Google dominates search. It’s when a superstar like Mariah Carey name-checks you in her number 1 song without even asking to get paid for it or having to explain who you are. That’s when you know you have become an important part of popular culture.

Two interesting bits of news.

Traffic for online real estate sites grows 

According to an article in Invertia, Fotocasa’s audience grew by 19% in February 2008. According to NielsenRatings, Spanish real estate websites had a total audience of 3.2 million viewers, or 17% of the total Spanish Internet audience. Fotocasa claims to have 1.6 million viewers, according to information provided by Market Intelligence, which would make it the most visited real estate site in Spain. The interesting bit is that Idealista generally also claims to be the number 1 real estate portal in Spain, and at least in the public imagination (as represented on the blogosphere), it is. And it’s strange that Invertia uses the sector numbers from NielsenRatings, but gets Fotocasa’s numbers from Market Intelligence, without any attempt to reconcile the two methodologies.

In any case, the good news that the crisis is not hurting the growth of Internet property sites. Fotocasa, in particular, seems to have wisely diversified its offering more to reflect current market conditions, with a healthy focus on rentals.

People will always need a place to live — the question is just whether they’ll have to buy it, rent it or share it.

But Banks Are Helping to Kill Real Estate Agencies and Developers

On the other hand, César Villasante (whom I met at SIMA and who is a really cool guy) has an interesting post about how Spanish banks are responding to the current crisis by discouraging potential home buyers. Based on anecdotal evidence, César recounts that many Spanish banks are counseling potential buyers to invest in the banks’ investment funds rather than buy property. The banks argue that property prices will continue to drop dramatically, so there’s absolutely no rush to buy right now. In fact, from the banks’ perspective, since the property itself is the biggest guarantee of a mortgage, banks have no interest in financing overvalued homes, because if and when the value of the purchased home drops, the banks’ risk exposure only increases. So the banks prefer to wait until the amount that they’re financing reflects the real value of the home, so that their risk is minimal in the event of foreclosure (and in the context of the current liquidity crisis).

When combined with the fact that the banks are not interested in bailing out failing real estate agencies or developers, the bottomline is that the banks are helping to hasten the death of a large portion of the real estate sector — on the one hand largely refusing to refinance vulnerable real estate businesses and on the other hand counseling buyers to wait until prices drop even more before buying property (or alternatively refusing to finance home purchases unless the potential buyers can provide lots of guarantees).

In the current market, time is on the buyers’ side, and it’s certainly on the banks’ side.

But with few realistic prospects of sales or refinancing their debt, the clock is definitely ticking for most real estate professionals.

Here at nuroa, our real estate search engine, we’ve been experimenting with citizen journalism.

In Spain, we’re recorded 3 videos so far under our series called “Y Tu Que Piensas” (So What Do You Think)? Our first episode asked people on the streets of Barcelona how the current real estate crisis might affect their votes in the recent Spanish elections. Our second video covered the March for Decent Housing and asked the participants to define “decent housing”. Pretty soon, we’ll launch our third video.

In Germany, we’ve recorded 9 videos when we visited Germany to attend the Re:publica conference. Kirsten has already launched two of the interviews (here and here) that we did at Re:publica asking well-known German bloggers where they live in Berlin and why. We’ll be launching our Berlin series of videos over the next few weeks.

So that’s why I read with particular fondness the post about the supposed Obama-supporting blogger that’s taking down the Obama campaign.  Mayhill Fowler, a blogger for OffTheBus.net, went to a campaign fundraiser as a citizen (press were not allowed to report on the event — it was supposed to be off the record), but she decided that as a “journalist” she had to publish in her blog Obama’s comment that poor small-town voters “cling to guns or religion or antipathy to people who aren’t like them” as a way to explain their frustrations. Of course, Hillary Clinton immediately jumped on the comments to show that Obama doesn’t relate well with an important base of the Democratic Party — poor whites. She claims that he’s elitist, as opposed to her and Bill Clinton, two Yale-educated lawyers who earned more than $109 million from 2000 to 2007. Obama, on the other hand, just recently paying off his student loans from Harvard Law School. But nonetheless, the quote is causing Obama a lot of grief, and some people are saying that it could change the course of the current race. (Maybe that’s just the traditional press looking for a story in a relatively slow news period?)

But my point is less to focus on Bill and Hillary, or Obama and Michelle, and to focus more on figuring out what a blogger’s responsibility is when she is both “citizen” and “journalist”. On the one hand, it’s clear that the Obama political team hoped to exploit “citizen journalists” by inviting them to political fundraisers and expecting traditional, fluff coverage about how great Obama is. On the other hand, it’s not clear that a blogger who’s invited to an “off-the-record” political event should be writing a story in which she breaks the basic rules by quoting the political candidates. After all, she wasn’t the only “journalist” invited to the event, she was just the only one to quote Obama in her blog.

What are the limits and responsibilities of a “citizen journalist”, and do they differ in any substantive way from the limits and responsibilities that “real journalists” face? What do you think? Is Mayhill Flower a snake in the grass, or a modern day Woodward and Bernstein?

Today, we’re launching a photo contest to find the most f*cked-up apartment. We’re launching the contest primarily in Spain, but anyone from any country with a picture of a f*cked-up apartment can participate.

We’ll be handing out 1 iPod shuffle per week until the grand prize is announced — a 32 GB iPod Touch.

The contest ends on 15 May.

As long as you are the legal owner of the picture, there’s a chance that you could win!

If any non-Spanish speakers have any questions whatsoever, don’t hesitate to be in touch with me: gary [AT] migoa.com.

Good luck!

The New York Times has an interesting op-ed piece about bringing hope, confidence — and buyers — back to the US real estate market. The author’s premise is pretty simple: To get home buyers back in the real estate market, it’s not enough to focus on lower prices, because a lot of potential home buyers are simply too scared to buy anything right now. And if they’re not scared, then they’re being very clever — that is, they expect prices to keep decreasing, so they’ll just keep on waiting to get the absolutely lowest price. A good deal is no longer good enough. Many buyers want the very best, cheapest option. After all, it is a buyer’s market.

The result is inertia fueled by a hypercautious speculation and fear, which would spell disaster for large sectors of the economy if left unchecked.

The solution therefore requires returning hope and confidence to real estate buyers. We need to convince them to suspend disbelief despite all they’ve been reading about credit crunches, foreclosures, sub-prime bla bla bla . . . The media is selling papers by selling fear, but it’s clear that a moribund real estate market is not in any country’s mid-term interests.

So the big question is: How do you return confidence to home buyers back in the context of carnage and despair that define current real estate market conditions not just in Spain but in many countries throughout the world?

The author suggests that the best measure would be to give potential buyers rebates to incentivize them to buy property - in this case, the author suggests a 5% tax rebate of up to $25,000.

And he argues that it should be done after the real estate market after the market has sufficiently corrected itself, which the author estimates should be between August to December 2008. Under this approach, the rebate would last for 12 months.

I’m not sure a rebate of €25,000 would be sufficient in the US market, but it might work in Spain, if done in conjunction with other measures. In Spain, the problem is two-fold:

• Buyers need to begin to have faith that now is the right time to buy — that they shouldn’t feel stupid for not waiting a little bit longer, and
• Banks need to be willing to lend people the money to buy property at an affordable price.

It’s clear that the first problem won’t be solved until the second one is addressed. In the last few months of my real estate business, one of the most frustrating experiences was finally getting an interested buyer only to have the bank reject the application or request a double guarantee or some other very stringent requirement that sent the buyer running back to live with Mommy and Daddy.

That being said, the sub-prime crisis is sufficiently scary to make me empathize with banks’ unwillingness to extend credit to risky applicants. Banks really shouldn’t be lending money to people whose only asset is the dream of being a property owner. If you don’t have a steady job, assets or any sort of guarantor, maybe you really don’t need to be a home owner.For me, the essence of the current quandary is stemming the circle of fear. Banks have lost confidence in businesses and in home buyers, and home buyers have lost confidence in ever being able to afford a decent home. And it seems that in large part, it’ll be up to normal economic forces and the government to instill confidence in both parties.

What do you think? Should the Spanish government offer similar incentives to home buyers to get them back? At which point should the rebate be offered? Will it make any difference, or are more fundamental changes in the Spanish real estate market required? If so, what might they be? And in light of the current credit crunch, what, if anything, should the Spanish government do to convince banks to support the real estate industry and potential home buyers, without going in the direction of the sub-prime mortgage debacle?

A few months ago, some real estate agencies were still claiming that there is no crisis currently facing the real estate sector in Spain.

But those people are probably either living in The Twilight Zone and/or out of business by now.

Even the New York Times has been running a series of stories about the Spanish real estate market, noting that the Spanish housing market is in even worse danger than the US market! That’s saying quite a bit.

In my last post, I looked at the announcement that Expofinques was seeking bankruptcy protection. Out of curiosity, I searched for headlines related to the other two franchises that I investigated back when I entered real estate in 2005: Don Piso and Tecnocasa.

Here’s what I found:

• La red de venta de pisos Expofincas suspende de pagos: I already examined this story in my last blog post.
• El Grupo Tecnocasa reduce un 39,3% su beneficio en 2007 y cerro 387 oficinas en España: Tecnocasa, another of the major Spanish real estate agencies, earned €8.8 million less in profit than in 2007, which is a 39.3% decrease relative to 2006. The group’s turnover was €51 million in 2007, 10% less than in 2006. In 2007, the group closed one-third of their franchisees (387 of 1052 offices). The franchisees overall earned €215.56 million in 2007, which was 30.9% less than in 2006. Tecnocasa sold 16,760 homes in 2007, which was 27.1% less than in 2006.
• Efectos del frenazo inmobiliario: Don Piso ajusta plantilla y cierra 26 oficinas comerciales: Don Piso, probably the strongest national brand, supported by one of Spain’s most blue-chip companies, Grupo Ferrovial, has 136 internal offices and 227 franchised offices. They note that the franchisees have been the worst hit, given that they have to pay a fixed monthly royalty payment of €1200 to €1500 (in Expofincas, for example, the royalty was variable, dependent on sales). In total, the Company had closed or expected to close 36 offices as of October 2007.

So what can we learn from the current crisis?

• It’s the banks’ (and Alan Greenspan’s) fault: Whether fairly or not, everyone blames the banks, which aren’t being very flexible in terms of lending money either to potential buyers or to agencies in need of refinancing their debts. Everyone’s been burned by the US sub-prime mortgage crisis and the resulting world-wide credit crunch (which some people are blaming on Alan Greenspan), and banks are no longer willing to take risks.
• A buyer’s market: If you are a relatively “risk-free” home buyer (meaning that you have your finances more or less in order — that you’re the kind of low-risk client that banks now like), then now is the time to begin your search. If not now, then in the near future, as both real estate agents and sellers are desperate to sell — in some cases, their very survival might depend on their capacity to get a few sales done. Agents and sellers no longer have the luxury of being chulo (arrogant), as pretty much everyone was a couple of years ago when buyers were fungible. Now the buyer is the queen!
• Internet is the cheapest option for sellers, and the most convenient option for buyers: Despite the crisis, people are still searching for properties, and when they do search, more are searching online. So even if the overall number of real estate purchases decrease, the percentage that is searching online is increasing. In addition, agencies are now more willing to try new, cheaper options that might allow them to reach interested buyers. For that reason, the newspapers will lose big as more agencies go under, because fewer agencies will be able to pay the exorbitant price of placing their ads in even 1 major newspaper. By contrast, Idealista is a lot cheaper, and nuroa.es, our Spanish property search engine, is free for agencies.

There’s an expression in English that “when the going gets tough, the tough get going”, which means basically that the only way to overcome a difficult situation is to work harder and better. The real estate crisis will no doubt shake up the Spanish real estate market, and there will be a few winners and lots of losers. But that’s life, and instead of looking at the glass as half-empty, I prefer to think that current market conditions provide a unique opportunity for disruptive Internet products that can help a troubled real estate sector buy a little bit more time in order to survive the current downturn. And it’s clear, of course, that I think that nuroa is such a product.

With all of the commotion about Expofinques’s seeking bankruptcy protection and continuing signs of a real estate crisis, I almost forgot to mention that nuroa has reached an agreement with Spain’s leading real estate group, Metrovacesa, to open up a new homes section to our property search engine.

I have to say that I really admire Metrovacesa’s approach. We first got in touch with them, when they invited Victor (the author of our Spanish blog “Sin Techo“) to a meeting to talk about their aggressive new Internet strategy. A lot of real estate groups are just starting to bet aggressively on advertising online, but Metrovacesa is already one step ahead; they’re not just trying to advertise properties, they want to complete the transaction online.

They’ve got cojones, and we admire that. And since we like to think that we also have cojones, we figured they’d make ideal partners.

I’d like to think that this is just the first of many such deals. After all, Metrovacesa is Spain’s leading real estate group, so convincing them was a pretty big test for us. Metrovacesa is one of the only listed Spanish real estate companies whose share price continues to increase, even as all of the other real estate groups struggle to withstand very brutal attacks on their share prices, or simply struggle to stay out of bankruptcy court.

They obviously have a clue as to what they’re doing. And it’s always exciting to know that market-leading companies have confidence in our project.

By the way, thanks to all of the journalists, bloggers and press services that wrote about the story, including:

• Javier Martín from Loogic
• Carmen López from OjoInternet
• Cinco Dias
• Yahoo Finanzas
• El Economista
• Finanzas.com,
• Carlos Mantero,
• Victor Aloi (Sin Techo), and
• Europa Press.

It was bittersweet to read that the real estate agency Expofinques has entered into bankruptcy protection. Expofincas is the first major Spanish real estate agency that has sought bankruptcy protection (various developers are already in a similar state of affairs).

I actually know Expofincas quite well. My first business was a franchise of Expofincas in the Eixample Esquerre, and I think I was among the initial group of real estate franchisees in Barcelona. I remember fondly the training sessions, which took place over a couple of weeks, and where I learned about “pisos calentitos” (apartments that will get sold quickly) and “compradores verdes” (first-time buyers who are eager to learn but unlikely to buy in the near future). I became fluent in the language of Spanish real estate speak thanks to Expofincas.

But by 2005, I realized that I wasn’t entirely convinced by their model. They had captured the form of American real estate franchises, but not the spirit. There was a lot of internal tension in the company itself between the franchise department and the internal staff (they have a mixed model between franchised offices that are run by entrepreneurs under a licensing agreement and offices run by full-time employees of Expofincas). In addition, their operational staff consisted of a lot of old-time real estate agents who were anti-Internet(though in later years they’d become one of the biggest spenders in online advertising). They instructed us that agents shouldn’t be given computers, because they’d only surf the web all day — that all of the tasks required for entering new apartments could be done by speaking with porters in apartment buildings, contacts and looking at La Vanguardia. Most of all, I hated that they treated the entrepreneurs and our staffs like dumb children. They didn’t see us as partners in extending their brand, and didn’t really want us speaking with one other franchisees. They made me feel like an idiot who’d paid a lot of money to fund their expansion efforts.

When I told them that I wanted out of my franchise license, they tried to convince me that sticking with them and their brand was the best way to withstand the eventual consolidation of the real estate market that we’d all been expecting but that no one really seemed to believe was around the corner. They highlighted the fact that they had the economic resources to withstand a downturn. And they hinted that if my agency wasn’t working as well as they’d originally projected, it was because of my own defects - not economic factors or failings of Exponfincas — which meant that my best bet would be to stick to them.

I left and eventually started nuroa, a property search engine focused on the German and Spanish markets, based in large part from the experience that I’d gained via Expofincas and then afterwards.

And there’s probably a lot of truth in what they said about my failings. It was my first business, and you really do learn a lot about yourself as a first-time entrepreneur. You learn a lot about yourself, your threshold for pain, your family, friends and loved ones, your strengths and weaknesses, etc. Everyone loves you when things are going well, but when things go badly . . . you really begin to understand the logic of the expression “a friend in need is a friend indeed.” And hopefully, you begin to live by the expression: “Fool me once, shame on you. Fool me twice, shame on me!”

So that’s why I feel a bit bittersweet. I chose to collaborate with Expofincas, because they had a great reputation in the real estate sector, and because they had an ad with Jesus Vasquez. And while I feel somewhat vindicated that maybe I wasn’t such an idiot after all, I also feel humbled to see such a prominent brand brought to its knees by the vicious combination of the international credit crunch (which meant that the banks didn’t give them viable options to refinance €10 million in debt) and the real estate crisis in Spain (which meant that they really don’t have any income to make debt payments and pay current expenditures).

I love Barcelona. As the people here say a lot, it has the perfect combination of “mar” (sea) and montaña (mountain). Beaches. Skiing. Great restaurants. Great food. Good-looking people. Great night life. What’s not to love? Carpe diem!

But lately I’ve begun to think that bohemian chic has its limitations. Let me explain. One of the things that I love most about Spain is that people here enjoy life. Too many people in the US have a 5-year plan they work like crazy to realize. On my very first visit to Barcelona, however, I realized that things here were different. I was 25 at the time, fresh out of law school. And I noticed that everyone here seemed so relaxed. Not a care in the world. They were all on the streets and partying. They embodied the Rent ethic that seemed so attractive after 7 years at Yale, busting my ass trying to be Maverick, trying to be the Top Gun. In this context, “La vie boheme! No day but today!” sounded especially appealing. You only have 525, 600 minutes in a year. How do you want to spend them? Forget all the bullshit and enjoy every day. Carpe diem!

That’s cool while you’re young and immortal. But as you get older, and you realize that you have fewer “todays” awaiting you, a long-term vision becomes unavoidable.

So what I loved about Barcelona when I first got here 7 years ago — the bohemian chic — looks more problematic as age gives me a little bit of perspective.

A few examples:

• Shitty service: One of my biggest pet peeves. The customer is the enemy, or at best irrelevant, in many Spanish businesses. If you want to come back, great. If not, who cares? Are you a loyal customer? That’s your problem! Just pay for your meal, and go — and I’m going to try as exploit you as much as possible while you’re here. Carpe Diem! For example, I eat at the same restaurant almost every day. For dessert, I usually get the arroz con leche, but one day I asked for the yogurt with honey. The waitress told me that they had honey, but I’d be charged extra for it. For a few drops of honey! Since then, I’ve been a little more reluctant to eat there. I don’t feel valued as a customer, so I’m trying to find my “Cheers” place — where everyone knows my name. And I’m not the only entrepreneur who laments this entrepreneurial short-sightedness in Spanish businesses. Yannick recounts a similar experience where a waitress charged for electricity when he plugged in his laptop! The title of the post says it all: A Catalan Starbucks, Impossible!

• Bye-bye 3GSM: A major international conference held in Catalunya? Impossible! Not quite, but given the oft short-sighted approach to business here, not far from the truth. A lot of blogs this week are lamenting that the organizers of the 3GSM conference want to leave Barcelona. The conference brings a lot of international prestige to Barcelona, but who cares? Let’s gouge the tourists! The petty thieves will rob them on the streets, the local businesspeople will rob them everywhere else, and the local government will remain largely silent because they’ll keep coming back, right? And all the taxi drivers that spend all day complaining in their smelly cabs about how tough life is will chat on their phones and drink coffee instead of attending to the surge of new clients, some of whom might even give tips. But who cares? Carpe diem!

Maybe it’s just a matter of getting old — from hippie to yuppie — or maybe bohemian chic really is an unsustainable way of life. Maybe as all of those long-haired, free love do-gooders of the 60s realized long ago, at some point we all have to grow up or suffer retarded development, both economically and personally.

This is the second episode of nuroaTV, our video channel for real estate. To record it, we went to the March for a Vivienda Digna, which took place on 1 March. We marched from Plaza Catalunya to Via via Laeitana to the beat of Brazilian drums. It seems like I can’t escape Carnaval! I was sambaing during the march — maybe I kind of missed the point?

More seriously, I should probably be more discrete, but that’s not my style. The real story is that we approached the organizers to see if there were some way that we could help out, since we too believe that everyone deserves dignified housing. As I will write in another blog post, I came to Barcelona in chase of quality of life. It’s still here, but life is now a life more expensive than it was just five years ago, and housing is only once indice of the problem.

In any case, the organizers kindly but quickly ushered us out of their offices, noting that they don’t work with “companies”, which I got the impression was a kind of dirty word. I respect that, even though I think that it’s important to include ALL voices in discussions that affect all members of a given society. I might not share the methods of squatters and more revolutionary anti-capitalists, but I do understand their frustration. And the only way to solve the underlying problems is to have a constructive dialogue in which we look for solutions together.

But I’ll save my kumbaya speech for another moment. For now, it’s enough that you enjoy the video, and let me know: What does the right to dignified housing mean to you? Does it mean anything? And if it so, what should society do to ensure this right?