Start a Business and Get Free Land

There aren’t any children around.

The last birth happened in 1968. The school closed in the 1970s.

No one uses the playground, which sits idle in the centre of town.

Streets are deserted. Most of the houses are in ruins or closed up.

There are almost no businesses and barely any economic activity.

Rush hour is at 9:00am, when the van bringing fresh bread arrives into town.

That’s what life is like for Olmeda de la Cuesta’s residents, a small village in Spain.

In the 1940s, the town had a population of 500. Today, there are around 30 residents, mostly over 65 years old.

As people have moved away to cities in search of employment, study and services, the village is slowly disappearing.

But in 2011, Olmeda decided to do something about it.

The thing is, how do you get young people to move into a dying village?

By offering a true bargain.

How to get young people to move into a dying village

You see, the village is located only 50 kilometres from the town of Cuenca, and 150 kilometres from Spain’s buzzing capital, Madrid. The idea is to attract young families with jobs that work mostly from home, or to get people who want to spend their weekends there.

And to do so, the town hall announced a few years back it would auction several land plots for about €5–10 to the square meter.

The only conditions: Buyers had to build a home in the following two and a half years, live in town, and promise not to sell the land for at least five years.

The town hall even promised to return the plot price if people opened a business in town and stayed for a minimum of three years.

And the offer has attracted some attention.

Since the village started the campaign, it has sold some land plots. Some homes are already built and more building projects are underway.

In 2017, Olmeda celebrated their first wedding in 44 years.

Olmeda’s problem is not an isolated one

There are many villages in Spain offering incentives like tax exemptions, free accommodation or properties at the bargain price of €1–2 ($1.60-$3.20) to get young people to move in.

In fact, the problem is so severe that there are even whole abandoned towns and villages for sale.

And interest is growing for these abandoned towns. People are scooping them up to turn them into rural hotels, vineyards, or to simply have them as a place to retire.

Yet this isn’t a problem limited to Spain.

Italy is also trying to fight the disappearance of their villages by offering cheap land. But that is only one of the strategies. They are even looking for temporary residents by offering immersive Italian language or cooking courses.

Can these towns avoid extinction? I am definitely cheering for them, but they are fighting an uphill battle.

Depopulation is a common problem in Europe. As we see more people move into cities and an ageing population, it leaves abandoned properties in the country side.

Cities have more services, more jobs.

But property prices in the cities have soared, aided by low interest rates. People are paying top dollar for them.

Cities may have services and infrastructure. But they are also cramped, dirty and overcrowded. There is air and noise pollution.

Meanwhile, rural land is much unloved. Not many want land in these areas.

But what if the urbanization trend was to reverse?

What if we start seeing more people working from home and moving away from the cities? What if people start moving out looking for more affordable land? What if people start looking for simpler ways of life and quieter places to retire as they age?

We could see these rural lands increasing in value.

In Australia property prices have soared in cities like Melbourne and Sydney in recent years. Meanwhile, salaries haven’t kept up with increases.

And, with property prices now dropping, people are starting to feel the pinch.

This from ABC:

Buried deep in the ANZ’s first-half results was a pretty disturbing story of just what is happening in the property market.

‘”We saw 500 or 600 families in this half get themselves into difficulties in terms of not being able to keep up with their payments,” ANZ boss Shayne Elliott observed.

‘”That’s a lot higher than we’ve seen in the past. So the question is, is this a trend? Is this a blip?”

‘Looking at ANZ’s 90-plus day mortgage delinquencies chart, it certainly looks like a trend, not a blip.

‘Over the past four years, in virtually every state and territory, delinquencies have stepped up sequentially each year.

Mortgage stress is increasing. If property prices keep on dropping, it may take a long time for people to recover the price they have paid.

Don’t get me wrong. I am not suggesting you pack up and move to a small town like Olmeda.

My point is that it is easier to make your money back when you buy at a bargain price than when you pay top dollar.

Best,

Selva Freigedo,
Editor, Markets & Money


Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find, in her opinion, the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.


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