The credit crunch and the Spanish property market
The credit crunch and the Spanish property market
The year starts off with a property warning on Spain.
Concerns about half finished properties start to circulate.The credit crunch is going to take its toll on the Spanish property business. One high profile developer, Llanera (till recently sponsors of Charlton Athletic) has already gone under, but we ain’t seen nothing yet.
Every day you hear another expert say everything is fine, all is well, prices won’t fall, this is just a return to normality, a soft landing , indeed a privilege and pleasure to experience, but it sounds increasingly panicky to me. I’m expecting significant price falls in quite a few areas, and some big casualties in the next year as companies with high overheads and/or high gearing run out of cash.
Plenty of developers will be fine, but plenty won’t. Expect a fair number of half-finished building sites to litter the coast for a few years yet.Why my pessimism? Consider this:The Spanish construction boom, now ending, was so monstrous there’s just no way it could ever end sweetly, even without the credit crunch.
Several years of 800,000 housing starts per annum, 18.5% of GDP going to housing / construction, pouring 66% more cement than Germany (whose economy is 3 times larger), and building 25% of all new homes in the EU last year, means the Spanish economy has become a real estate junkie. The only known cure for junkies is cold turkey, and that’s never pleasant.
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Tags: spanish, property, market
