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Labour migration - what's happening and does it matter to property investors?

Two different comments came together for me yesterday... one from Dublin, Ireland - about the Polish migrants and the other from Castellon, Spain about Romanian migrants.

The first - from Dublin - was that perhaps 25% of Dublin is populated by Polish migrants? Some are looking very settled - with young children and very much a part of the the city.

Some people even play a pub crawl game in Dublin to see how many pubs they need to visit before they can find an Irish person to serve a pint of beer in a pub!

That's comment number one - comment number two is from Castellon, Spain...


... a small number of Romanian migrants are defaulting on their mortgages in Castellon (a centre of the Spanish tile industry and a focal point of recent immigration from Romania) and are returning to Romania.

Why the difference? And does it matter?

Actually, I'm not sure it does matter - but they both represent the modern economically thriving Europe in which property prices are either already highest (or are booming as per Poland and Romania).

You could argue that Romanians are returning home because of the construction boom at home and the increase in wages.

You could expect that same argument to work for Poles in Dublin, who could return home for better conditions than every before.

So, why is one group going home and the other not? (Okay, I am generalising here, but this appears to be the trend).

And does it matter?

Well, let's take Spain. If low cost construction workers from Spain leave to go to another country - does that matter? Only if it reduces the economic development of the region, I'd say.

If they are replaced by other low cost workers from, say, Ukraine or Vietnam then it doesn't matter - it only shows that labour moves freely.

Equally, now that so many properties have been built in Spain there is a growing tendancy for agents to seek to earn their money through lettings and not sales - and from marketing property rather than constructing it.

Of course, white collar marketeers earn much more money than low cost labourers on building sites - so, perhaps this isn't so bad after all, in terms of the broader economy?

Probably the truth is that none of us can really see the consequences for all this - other than to say that I'd rather be in Spain - where labour migration is relatively free and economic growth remains strong, than in France where labour is too tight and growth is sclerotic.

Perhaps another way to think about this is as follows - 'does it matter that all the old-school investment banks of the city of London sold to foreign investors in the 1980s and 90s?'

The answer is that whilst foreign investment feels uncomfortable, it actually was a healthy thing, as it brought new investment and talent to the city of London. And for this reason, the UK's growth industry over the past few years has been financial services.

Perhaps Spain is just going through a restructure from low grade construction work to something higher value?

It might not do this all by itself, there may be a bit of blood spilt, but the resiliance of the Spanish economy is astounding compared to its Euro neighbours. And that surely, is partly down to the free migration of labour?

Cheers
Neil

ps. here is a new business opening up in nearby Valenica - flights to Romania! There are three low cost carriers competing on 4 routes to Romania - plus of course the flag carriers such as Taron. This has occurred in the past 12 months - and I don't know how many people are employed, but the flights are full for upto 1 month ahead!
POSTED BY NEIL LEWIS ON TUE 28TH AUGUST AT 10:01 GMT
TAGS: Romania Property, Property Investment
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Neil LewisNeil Lewis, CEO and founder of Property Secrets, is an experienced property investor in his own right and author of two highly successful property investment books, Buy To Let Secrets and Property Developer Secrets.

Neil owns property in the UK, Spain, Poland, Romania and the Czech and Slovak Republics. He is a regular columnist for Property Week magazine and has been quoted in a number of UK and European broadsheet newspapers and magazines.

A regular speaker at property investment events, Neil has appeared at CEPIF in Warsaw and the Property Investor Show and the Homebuyer Show, both in London.

His business background is from publishing to a wide range of industries such as Finance, Music, Travel, Economics and Politics before setting up Property Secrets seven years ago. Neil studied Philosophy and speaks German, Spanish and a lot of English.


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