The Old Algeciras

Morning came in the usual way. We were lying on a grass verge behind a clump of trees somewhere between La Linea and Algeciras. Unfortunately, altho this did not constitute the edge of a main road it obviously was in the path of a lesser road which we hadn’t noticed. In daylight I could see that what we thought was a patch of waste land was in fact a track leading from one of the villages straight onto the main road.

Already the donkey carts were creaking along the track inches from our sleeping bags. A few yards away another stream of carts was making its way along the tarmac highway to the fields. The carts that creaked, the wooden wheels that groaned, and the rhythmic clatter of donkey hooves on tarmac was our usual early morning call. We paid no attention.

Then there was a terrific scream. It was a horrible ear splitting screech. All three of us sat up in alarm. I thought a car must have run down a donkey. We stared at the road but everything was calm, and then there was an ear-splitting rattle and a sort of bang, and out of the trees on the other side of us rushed this great iron contraption. It looked like one of those engines they were supposed to have in the American west in the eighteen eighties. The engine leapt pass us with another ear splitting shriek and vanished into a clump of bushes with its three coaches on there way to Algeciras.

“Stroll on! What a way to be woken up of a morning,” said Alan, staring hard at the clump of bushes where the train had vanished.

No-one was ready to get up yet as the sun had only just risen above the horizon, so we settled down for another half hour.

Unfortunately we weren’t going to get much more sleep. There was a rhythmic squeak coming from somewhere.

“Oi, who’s got a mouse in his sleeping bag?” yelled Alan.

Just then a wheel wobbled past my head, then some legs, then the other wheel. I sat up, and there weaving down the path was a Spaniard on his bike, obviously off to work.
Alan gave up and rose from his sleeping bag and started arranging his pack of gear while singing a rude song. Michael asked for the last few lines to be sung again and burst into fits of uncontrollable laughter.

As we drove towards Algeciras we passed bulldozers flattening the hills and bulldozing out new roadways. Street lighting was being put in along empty half made-up roads that stretched away into the hills.

“La Nacion, La Nacion.”

“Dos cinquenta Señor.”

Thick little newspapers like magazines for sale, padded round the front of a small dark man.

“Por dios, Por dios señor.”

A little white-haired crone sitting in the sunny corner of the pavement cafe. The gentle pull on the sleeve, smooth stroking of shirt sleeves, and a rich brown loving face pleading with the depth of dark brown eyes. “Una peseta señor, una peseta.” Followed by the brush off, full of shame. “Oh señor,”  And you try to avoid the face full of deep expression and those heart-stabbing eyes.

“La nueva lotteria.” Not another one. Or is it the same one as last time. Every day it seems to be a new lottery. There are little collapsible stalls along the pavements with blind sellers huddling in their seats behind big sun-shades. “Dos, dos-cinquenta, tres…”
There was a sudden loud belch as a steamer boomed its rude call across the water littered with small craft. Lonely policemen strolled aimlessly about the traffic-empty streets, now and then directing heedless pedestrians swarming up the hill and spilling into the side streets.

One almost trips over the crouching boot-blacks perched along the edge of the pavement filing away at newspaper-reading customers’ shoes. The market place was swarming with piles of fruit and vegetables, with lemons, bananas, both green and yellow, and dates like globes of gum, chillies like corkscrew carrots, smooth mounds of paprika, speckled mounds of rice, dried blood-red powders, whites, greys, browns. Fat fish swelled their fat bellies across the wet slabs, dangling their flimsy tails into the crowd. Chickens, turkeys, and doves sitting patiently on their pavement lot, waiting to be chosen for the pot. Chickens in cages, chickens being carried off upside down, dangling by their feet, heads still upright, gazing abstractedly about them.

The narrow streets almost like large gutters; cobbled deep ruts between high pavements. Ladies calling raucously across the street; old women dressed in shrivelled black, wizen-skinned like the gobbled chops of turkeys. Young women in gaily coloured scarves briskly smiling at the shop-keepers with their rich red lips; little girls with skirts that almost refused to cover their bottoms, sucking dirty fingers, staring at the food and lovely clothes. Men standing, leaning, always watching, waiting, almost asleep under the ragged trousers and tangled coats.

Down the side streets were the dark cool bodegas: Vino Jose, Bodega Callejo.
Across the street the water was white in the sun, and strewn with craft, their masts spiking into the skyline. Ropes sagged from massive stone capstans, slowly dipping into the water, then turning and rising high as the boats rocked on the gentle swell.

Thick Atlantic clouds were sweeping in, dulling the sea with a spatter of rain. The wind whipped the waves into life. Within minutes the bay of Algeciras was changed to a dull grey.

Michael and I drove the van into the belly of the ferry to take us across to Ceuta. We left Alan on the station platform waiting for the train to take him up to Granada, and then Madrid and back to the UK.

Slowly the land slipped away; cranes, derricks, masts, rigging, people standing watching vacantly the passing of the ship, and then they squatted down by the white wall close to the quayside waiting for the next event to take place.

From over the northern hills the red light of a plane winked as it circled in to land along the wide runway of Gibraltar airport that stretches out on both sides of the promontory, and we left Europe.


Mr Henderson’s Railway -1

Travel in Spain

So here I am again travelling in Spain. I’m back in the province of Cadiz, and this time I have an unusual project ahead of me. Last time I was visiting Gibraltar I decided to take a different route home, and turned left at San Roque, drove to the bottom of the hill where I turned sharp right and headed for Jimena de la Frontera. I am in search of Mr Henderson’s Railway.

“But it closed years ago,” said my new friend as we sat and chatted on the roof balcony of our hotel, overlooking Algeciras Bay on one side, and the massive Rock of Gibraltar looming over us to the south.

This is an unusual piece of the culture of Spain. Once again the British are in on the act, forging tunnels in the history of Spain.

The line was originally built between 1890-92 to enable British garrison officers and their families to escape the claustrophobic atmosphere of Gibraltar and enjoy the surrounding countryside. Travel in Spain was difficult in the nineteenth century. You could not tour Spain by road without great difficulty.

The railway was the work of a British engineer, John Morrison, backed by his friend and railway enthusiast Sir Alexander Henderson (1st Baron Faringdon, CH, 1850-1934). Henderson was fascinated by the railways, and was heavily involved in many rail projects in the UK and in South America.

This new line ran from Algeciras to Bobadilla, just outside Ronda, where it met the main line to Madrid. According to the records, when it opened it operated no less than six passenger trains a day through 22 stations at the grand cost of 11 pesetas and 65 cents for a first class seat from San Roque to Ronda.

To make the travel easier Henderson arranged for a first class hotel, the Reina Cristina, to be built in Algeciras within walking distance of the station, and overlooking the bay where the packet steamer would bring travellers across from Gibraltar. Apparently the grounds overlooked a sandy beach. Not so today as the port has grown substantially. In fact, the railway line which originally ended right next to the quay when I first visited Algeciras seems to have been moved back somewhat.

Another line has disappeared altogether. When I first came to Algeciras and Gibraltar in the sixties we camped on waste land where there is now a massive oil terminal, and one morning we were woken by the terrifying screech of a locomotive that rattled past us at the crack of dawn.

For those of you who want to enjoy a bit of Spanish history here is Chapter 36 of my book on Spain. Algeciras in the mid sixties was a tiny town, and the road to La Linea, then an even smaller dump between the hills and the sea, was a twisting track.

But let’s get back to that hotel in Algeciras. So proud was the hotel of Algeciras’s sub tropical climate that guests were promised a refund on their room rate for any days between May and September spoilt by rain. We could do with a few more enterprising deals like that.

King Alfonso XIII of Spain and his English Queen Ena, who was a granddaughter of Queen Victoria, were frequent visitors, as were a host of famous people since.

The train itself was not renowned for its speed, and was dubbed The Smugglers’ Express, because it travelled so slowly up some of the steep inclines that people could sell contraband booze, coffee, and sugar from the train windows. These days the train has a mechanism for overcoming this problem. When the wheels begin to slip sand is released onto the rails to help the wheels grip.

The train still runs on a single track for most of the way. “In the old days before electronic signalling systems were operational, the stationmaster would give the engine driver a cane hoop, which he in turn would hand to the next stationmaster. This procedure would be repeated for trains waiting to travel in the opposite direction, and acted as a fail-safe back-up to the morse code telegraphing system to signal that the line was clear.”

And so we set off in search of Mr Henderson’s railway. We drove down the nice relatively new and well surfaced highway towards Jimena de la Frontera. As you all probably know, town after town in this region has a name that almost always seems to require the description de la frontera (often abbreviated to fra). The trouble is that back in the middle ages the frontier between Moors and Christians changed so many times that virtually everywhere was on the frontier at some time or another. One of the towns changed masters about ten times over the course of 150 years. Life must have been a real pain.

Now all is peaceful as we drove over a bridge, and into the valley, and there immediately below us was Mr Henderson’s railway, with a freight train approaching a large reclamation depot with trucks filled with crushed metal.

Train on Mr Henderson's Railway

I didn’t really want to tramp around an industrial site, so we moved on up the valley. At the village of Almoraima I stopped to photograph the station, and then went on a trip around the nearby new town of Castellar de la Frontera.

Okay, hands up those who think that last sentence doesn’t make sense? Well, in a sense you may be right, but….. (and isn’t there always a ‘but’?) let me explain.

The original village dates back to prehistoric times (round about 25,000 BC), and that is quite some heritage. The village is perched on top of a hill, and contains the usual castle. It is quite some castle, and the views are terrific. Unfortunately, on the day I turned up with my camera the weather was dull and cloudy, with rain threatening.

View of the castle

In 1983 the Spanish government expropriated the whole village, declaring it to be a historical and artistic monument. In order to put the place on the map and renovate the almost ruinous buildings the government decided to build a new village down in the valley next to Mr Henderson’s railway. This is, of course, Castellar New Town. And they got a new station as well.

In the next instalment I’ll visit both the old and the new.


Retirement Pension Plans: Get 14%+ Safely

Retirement Pension Plans. Get 14%+ Safely

As a result of some of my earlier comments on how much one can get for one’s investment money I have had a deluge of requests for more information on where I am getting good returns. Many of you have retirement pension plans which are simply not giving you much in the way of return on investment, and have questioned that high investment returns are all very well, but how safe are the underlying investments?

I could start to answer your questions about where I’m getting my high investment returns, but that would take me forever, and involve rather a lot of work. Instead I have decided to start a new investment newsletter which I will issue once a month. It will concentrate on one particular investment vehicle each month. It will also contain any real estate deals going to auction that month which, at their guide price will bring in a good return on the money used to purchase each property.

In short, I will be giving you a guide for your Retirement Pension Plans. The twin guiding measures for the investments will be simple. First, each investment must return a minimum 10% p.a. I shall be aiming at 10% plus the rate of inflation. That means I shall be looking for investment deals that produce at least 14% at the moment.

Second, I shall be looking for investment deals that are as safe as possible. There is nothing that is 100% safe, and it would be foolish to think there is. You can certainly put your money in the building society, which will currently bring you in just over 3%. With inflation running at 3.5% that means you are effectively losing money. Well, if that is your idea of 100% safety, where you are guaranteed to lose money, I dont think much of it. I shall be assuming that nothing is worth more than a 90% certainty of making money and protecting your capital. However, the investment deals I shall be choosing will come with that percentage of safety.

The first investment bulletin is now out and available. I have, in searching for other things, come across a series of property investments going to auction that should bring in more than the 14% minimum I’m looking for. One even promises to deliver 20%.

I was not intending to highlight property deals per se, and certainly not rentals, or leaseholds, but some just screamed out at me, so I decided to bring them together to show what can be achieved for your Retirement Pension simply by buying the right property.

For the next few issues of this new newsletter I have lined up a tax deal in the US which brings in between 16% and 50% and has a AAA investment rating. You just cant get better than that. And it isn’t a fly-by-night scheme, as it has been going very successfully for more than 200 years.

I have also lined up a wine investment bringing in up to 30% p.a., and which is getting even better as time goes on, and it is a scheme I have successfully invested in myself for the past thirty years.

I did wonder whether I would quickly run out of ideas, but I currently have about a dozen sitting on the table in front of me. They all bring in high investment returns. Not a single one returns less than 12% p.a., and all but two are what I would call 90% safe. The other two are fun investments which may appeal to some of you who are prepared to take a slightly higher risk.

In the first bulletin there is one deal that, if you leverage it using a mortgage, can potentially make you just over 52%, so you get your money back in two years. That’s some return on investment. Other deals come in at 20% and 15%, and a low one of only 12.5%. These are all very safe investments backed by real estate.

One thing I can guarantee and that is I will not bring you any get rich quick schemes. They dont work. This is very much a scheme based upon long term growth of money, and the creation of a retirement pension scheme that is far more secure than one based on shares, unit trusts, or bonds, and which is under your control with no management fees.

Now, if you’re serious about that retirement pension, here is the place to subscribe.
You cant really go wrong, ……unless of course you dont bother to click the link. In which case, good luck. You are on your own and you are sure gonna need it.

In the meantime do keep me posted on what you would like from me. I do try to tailor the information I give out to your needs.

john clare

Crisis in Spain?

Crisis in Spain?

I have spent the past week travelling along the backroads of Spain. Several things are quite clear to me.

Spain’s economy is in a mess. In the good old days your average restaurant/bar would have a menu del dia, which was usually good value, probably selling at around €9. Then there was the more expensive deal costing anything north of €15. Those deals are still with us, but we now have an addition to the club, the Menu Crisis. That often comes in at €7 or less. Times are indeed tough.

I also note that tapas portions are getting bigger. Are tapas portions morphing into meals? Some restaurants are advertising that their tapas only cost €2. Everything is getting cut to the bone.

There is also a severe problem with unemployment. I travelled through Andalucia, Murcia, Valencia, and a bit of La Mancha. The south is traditionally the worst for unemployment. But this crisis is different to the disasters in previous centuries.

Your average country town or village is holding up quite well. There is an underlying mood of optimism, at least in terms of survival. The hard luck situations are being absorbed. Wherever I went the visible side of life was cracking along as normal. The city of Murcia seemed to be doing better than I have ever seen it, and the darned place is still expanding. Albacete looked to be doing well. Seville always appears to be booming whatever may be happening in the back alleys.

If I turn to a village in Valencia province I have to wonder how the folk still look happy and smile, while the town hall issues a rather fine calendar. Every municipality runs a vibrant website, with masses going on. We may well be seeing Roadrunner still running furiously while hanging in mid air, and maybe in the next frame he will plummet down, but…..

Certainly a lot of businesses have gone bust. Certainly the Spaniards aren’t travelling like they used to. They certainly aren’t attending the Portuguese markets like they used to. But when I drive through apparently endless fields of fruit trees, corn, and vegetables I wonder how they can ever become really poor. This crisis is one of banks and governments, not whole economies.

I’m going to stick my neck out and say Spain is not about to go down the pan. It’s going to spring back. When, I dont know, but the doom and gloom is overdone. Mind you, if you own an apartment on the costas and want to sell, then you have a problem. But if you do own one of those I have to ask, why? I did warn you.

Next week I’ll continue my notes on Spain. I’ve got quite a few travel notes to catch up with, and maybe I’ll throw in a few pictures as well. See you then.


The Auction Index

The Auction Index

I used to keep a monthly auction index which was available to members. Very few people emailed me any comments about it, and no-one apparently noticed when I stopped updating it, so I have not published the index for some time.

In an active market the auction index is very useful to show the direction of the market over the short term. It is also very useful at any time in showing whether prices are generally too high, too low, or about right.

It’s not difficult to guess how I do this, but I’m not explaining it. However, I’ve decided to give the odd snap-shot of how the auction index is behaving. Maybe I’ll update it quarterly on the Unique site. At the moment you might be interested to note that generally speaking the index is too high. It is in the range of 15-25, which means prices are too high. That doesn’t necessarily mean they are likely to fall, but it does mean that in general current prices do not give you value for money.

The best deals are to be had when the auction index is below 10. Above 20 and the prices are too high. The latest auction I monitored in the South-East was exactly on 20. So it is high but not dangerously so. I still say there is plenty of room for prices to fall, but the mood of the market seems to be that prices are about right.

In the north I recently found the figure at 25. That is way too high. This means that we have the unusual situation of prices being perceived as too high in the north but not quite so high in the south. Expect more falls in the north than in the south.

I hope that rough guide helps, and if anybody wants me to develop this theme, do get back to me.


Spanish Repossessions

Spanish Repossessions

You will note that one reader has asked a very simple question. Bearing in mind my rather drastic remarks about property values he quite rightly wonders whether spending half a million on a dream home in Spain is a wise decision. Are repossessions the answer?

Various points are made as part of the question. He wants to own his own home. He wants to live there in a long and happy retirement. And why not? But the place costs half a million. Is it worth it?

The questions here dont really relate to whether one should rent or buy. Other questions, such as what happens if one’s partner gets ill, or dies, dont come into the discussion. These are private matters, and I trust the questioner has worked his way through them.

I cant write a book here about Spanish repossessions, so I have to skate over a lot of points, but my main point is a general one. It relates to values. It relates to the system governing house prices.

Let me show you something. My mother bought a detached three bedroomed house in 1949. She paid the vast sum of £750 for it. It was a cash purchase. It cost approximately the same money as a new car. Since then the value of money has plummeted. I reckon in terms of inflation, you would have to multiply that figure by about 50 to get a similar price today. In short it would cost about £37,500. Before the crash it would probably have sold for an extra nought, say, £375,000.

I can understand house values going up to counteract inflation, but why the extra nought? Where did that come from?

My mother had to pay cash. Any buyer in 2005 or thereabouts would have probably bought with a 95% mortgage. Having mortgage finance makes the process of house buying a totally different situation. You do not pay in one go, you now pay over a 25 year period. With interest rates on the floor the cost of the money is less than the march of inflation, which means you essentially get the loan for nothing. That makes it possible to pay a lot more for a house than before mortgages were widespread.

Now let’s see what happens when mortgages become difficult or even impossible to get. Have another read of my analysis of that friend’s flat near Albufeira in the Algarve. The actual cost of the flat with a mortgage allows a valuation of about €90,000. Without a mortgage the real cost of the money needed to buy gives a real value of about €35,000. The difference is vast. And this is not just an academic exercise. With a mortgage I could afford to pay the higher figure. Without it I would be hard pushed to pay even that lower price. That means the price at which the flat changes hands has to drop quite drastically to take into account the difficulty of obtaining useful mortgage facilities.

House prices rise with the advent of easy money. They fall when that easy money is removed.

House prices across Europe will continue to fall while the current monetary fiasco continues. And it is set to continue for the rest of this decade if the current political chicanery is anything to go by.

I am not telling people that they should not buy houses. I am not suggesting everyone moves into a hotel. I am merely pointing out the best use of money. If you want to spend ten million euros on a nice little Picasso, then spend it. If you want to make your money work for you to produce a good income, then do so. It’s your choice. All I’m doing is pointing out equivalences. And I am pointing out that the equations have changed due to the locked up banking system, and the demise of the easy money system we have been used to for the past fifty years.

Any house bought now will be worth less in a year’s time. It will probably be worth less in ten years’ time. If that does not concern you, then buy what you will. If you have adequate funds for a great lifestyle, then you have nothing to worry about. If, on the other hand, like most people, you need to watch the pennies, and need to make your pounds go as far as they can, then dont think real estate in Europe until easy money comes back into fashion.

I still say that the easiest way to value a house is to weigh up the difference between the cost of the money to buy, and the cost of the money to rent. Ideally there should be no difference. If the difference is more than 20% in either direction then one of the prices is way out of line.

I can get at least 10% return on capital. 10% return on half a million is about £1,000 a week. Would it really cost that much to rent that half a million pound house? How about offering to rent the house until the vendor considers a price reduction?

The way to find cheap Spanish repossessions is to avoid estate agents. Your first point of reference is the local newspaper. The second port of call would be the local bank. Ask them to put you in touch with their repossession centre. They will have thousands of properties they are desperate to get off their books at rock bottom prices. Let them know exactly what you want, and they will send you a list as long as the Nile. So long as you can cover the mortgage they will be happy. Cover 75% of the mortgage and they will probably still be happy.

As to the area, just outside Javea, I think it’s rather nice. I used to live there myself, and I was very happy there. If you do buy, invite me over for a couple of days, I can tell you some interesting stories. I will add a few Spanish repossessions in that area in the next members’ bulletin.