Major developers in Spain build nothing for six months

The biggest developers in Spain did not build a single new property in the first half of this year, an unique situation that shows the depths to which the economic downturn has hit building in the country.

The G-14 group, a lobby organisation for the biggest listed developers in the industry, said it is hopeful that some new properties will be built this year. It is now forecasting around 500 new builds but this is a drop in the ocean compared with the 500,000 new properties that were being built annually by the group at the height of the property boom.

For the industry as a whole, the G-14 forecasts that there will be less than 150,000 private housing starts this year throughout Spain. That will be the lowest level since modern records began and sparce compared with the one million new homes started in 2006.

The figures confirm the deep financial crisis facing the big developers. Most of them are listed on the Madrid stock exchange and several, such as Martinsa Fadesa with debts of €7 billion, are in administration or seeking court protection from their creditors.

Indeed those who have invested with Martinsa Fadesa do not know what is happening to their money and some are still making payments on properties that have not been finished, according to Adicae, an association that represents bank users.

‘Buyers have to carry on paying for homes without knowing when they will ever be built, and without knowing what their money is being used for,’ said an Adicae spokesman. Adicae also claims that the company has introduced new clauses making refunds conditional on properties being sold on to other buyers.

Another developer in trouble is Aifos which has been forced to seek protection from its creditors with debts of around €1 billion. It has gone into voluntary administration and says the move will protect its investors.

‘Court administration will enable the group to restructure its debt to cope with the real estate crisis as well as guarantee the continued activity of the company, the honouring of contracts with others, and safeguarding the jobs of its workers,’ the company said in a statement.

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