The news from the other side of the Atlantic was not encouraging; according to the American National Bureau of Economic Research the US economy had been in recession since December. That information meant nothing to Nicole Kavanagh. In her luxury penthouse apartment overlooking the Guadalmina Golf and Country Club golf course, a few kilometres from Marbella, she had little to complain about.
Skynews was Nicole’s only permanent link with home as she slowly adapted to a new life, far from Epsom in suburban England, in the comfort of her new and spacious penthouse apartment in Spain. Of course she returned to the UK every few weeks to see Ryan and Sarah, her grown up children, to meet her accountant and keep track of her business affairs.
Her life in Marbella, whatever the troubles Spain was experiencing, was that of leisure and tranquillity compared to the outside world. She recalled her grim sojourn in India the previous year, a holiday that had ended at the Taj Mahal Palace after fleeing from a terrifying cholera outbreak in the small tourist resort of Kovalam in the south of Kerala. A few months after her return, she had been shocked by the terrorist attacks on the very same Bombay hotel, transmitted in real-time for Skynews viewers. She remembered her feelings of horror and more guiltily a sense of schadenfreude. It was a reminder of the bombing of the London subway in 2005.
No one was entirely safe from such abominations. Terror had struck Spain in 2004, with the terrible attack in Madrid; described to her by other expats, a tragic event so often glossed over by the media back in the UK; two hundred Spaniards had died after Islamist extremists exploded their deadly bombs in crowded commuter trains.
But she was becoming inured to such alarming events, in the same way as she brushed aside the sombre forecasts reported daily by television commentators concerning Spain and the economy in general. Nicole had escaped the crisis in London by the skin of her teeth, selling her large house in Epson at the peak of the property boom, and not only that, she had also miraculously avoided the disaster in the Spanish real estate market.
At least her condo had been completed with few of the problems that bedevilled Spanish property construction permits, though there had been a stressful three years of wrangling with the builders and their agents. It was now her home for a good part of the year, fully paid up and beautifully furnished with ample space for her guests.
Things had gone horribly wrong for many Brits in Spain. After three of decades of prosperity the post-Franco boom was over. Spain had matured and its economy resembled that of its northern neighbours. Thousands of Spanish workers were losing their jobs with the country’s unemployment rate one of the highest in Europe.
The Spanish construction industry, which had accounted for almost ten percent of the country’s economy, had collapsed with numerous property firms, and most notably Martínez, going under. The drama that had started in the construction sector had now spread to the entire economy, though, surprisingly, its leading banks were still in relatively good health, provided Latin American did not go belly-up.
The Spanish property market was burdened with more than one million unsold new homes and Nicole Kavanagh was keeping her fingers crossed, because if ever she was forced to sell up it would be at a considerable loss. She was however an optimist and she knew when spring came around in early March, as it did in Marbella, life would be gayer.
Although Nicole was pleased with her new home, its value was now much less than the price she had paid for it. As always she calculated in pounds sterling, so whilst the price had fallen in euro terms, the difference she reasoned was at least partly offset by a twenty percent rise of the euro against the pound.
Beyond Nicole’s narrow but comfortable world, the situation in Spain was slowly going from bad to worse. Unemployment looked like it would soon reach the four million mark with one quarter of the country’s total work force out of work. The collapse of the construction and housing sector had begun to bite deep with developers owing over three hundred billion euros to the banks, a sum equivalent to a fifth of the country’s GDP. It was a certainty that many of the loans would go bad as borrowers were stretched to breaking point.
She was oblivious to the fact that Spain had as many unsold homes as the US. In spite of the constant flurry of bad economic news her golf pro was still smiling; he had invested an inheritance of several hundred thousand euros in shares of Bankia, a Spanish bank. It was his favourite talking point and with each lesson he announced the latest market news to Nicole. Bankia was an exception, its shares had, for the moment, weathered the storm and dividends were paid like with the regularity of a Swiss watch. What Jose-Luis ignored was many Spanish banks, and perhaps Bankia, were not writing their property loans to market value, in other words the real risks were hidden in deep their books.
All that bad news seen from the tranquillity of her penthouse terrace, which overlooked the golf course with a spectacular view of the mountain scenery beyond, was somewhat abstract. She was far from being affected by the crisis, though in terms of total assets her net worth had suffered a steep fall, due in part to the value of her London properties, some of which still had outstanding loans. She had hoped to sell them, rid herself of the loans, but that was no longer possible; reasoning the crisis could not last for ever, she resigned herself to having weather the storm. Nicole was right, the storm could not last forever, but it was certainly going to last longer than she expected, or for that matter anyone else, much longer.
Her more immediate concern was a man. She dreamt of finding the kind of man who could take her under his wing, who could provide her with companionship and protection, a man with his own money, not a sponger. She was fifty and a good looking woman, even if she was a little overweight; who wasn’t these days she told her girlfriends. Whenever Nicole looked in the glass, that is to say frequently, saw herself as being no different physically to the average English woman of her age. The difference however was she could afford to dress well and pay for the kind of beauty care that most others could not afford.
Lord Edenderry, a minor peer, fit the role. He was just the man for Nicole, at least she thought so. Guadalmina Golf Club Villas had been developed by Martínez Construcciones and Edenderry had promoted the sales from the UK end. His business had been to find buyers, in the majority British or Irish. After the collapse of Martínez, the appointed liquidators organised a fire sale and the golf course development was sold to a property group owned by the Irish millionaire Brendan Allen, whose group operated in Spain under the name of Inmobiliarias Córdoba.
Allen hoped to recoup his investment by renting the unsold homes to British and European holidaymakers, and Edenderry, also an Irishman, was only too happy to find another partner. He was one of the many penniless Irish lords who, according to the brief citation in Burke’s ‘Landed Gentry of Ireland’, bore a hereditary title, which he monied, like many of his kind, by bringing the kind of prestige that naïve investors, especially foreigners, appreciated. It went down well back in London when buyers like Nicole talked of her titled friend: Lord William, the thirteenth Earl of Edenderry. The reality was quite different, the Earl was considerably less well-to-do than Nicole, he was in fact in dire financial straits; his family’s already modest domain had been sold to pay death duties when his grandfather, the eleventh earl, died and what was left from the sale of the property seemed to have dwindled to a mere pittance as Edenberry’s property investments went awry.
Edenderry, always impeccably dressed in a Savile Row pin-stripe, looked the image of a City businessman. With his upper class accent he smooth talked potential customers, certain of whom were wined and dined in prestigious hotels and restaurants in London. Camping his role, he liked to tell prospective clients how his father, once a London stock broker, being told his clerk lived on an estate in Romford, replied, ‘How splendid. Does he keep horses there?’
In short, Edenderry was a salesman and his clients, neither widows nor orphans, and not from Romford, were mostly better off buyers seeking a property in the sun at the end of a successful
career in the UK or overseas, and by definition worldly.
Business transited by a City mortgage broker named Temple Finance Brokerage, which was now suffering from the credit dearth. As a friend of a lesser cousin of Fitzwilliams, Edenderry developed privileged contacts with a Dublin mortgage manager at the Irish Netherlands, and during the good times put a lot of business his way.
Edenderry had taken advantage of his position to invest in Dublin BTLs, thanks to highly leveraged mortgages. He was no different to many small Irish investors, naively believing he was onto a good thing. On paper it looked good, in reality he had fooled himself into thinking he was a man of substance. By buying BTLs in Brendan Allen’s property developments in and around Dublin, and more recently buying off-plan in the vast Pembroke new town project, Edenderry had unwittingly put an end to the dream of recovering his families past prestige.
Chapter 27 MAGIC MUSHROOMS