The report from Euroconstruct, a construction sector forecast organisation, says Spain will suffer 'a sever adjustment in the residential property market, with output falling 18% in 2008, and 16% in 2009'.
Although the report does not provide a forecast for 2010, Anton M. Checa of IteC, the institute responsible for Spain, predicted activity will continue falling in 2010, but only by 5% to 10%.
According to Checa building activity in Spain will not pick up again until the estimated 750,000 to 1 million properties in stock are sold.
It adds to the continuing problems for developers in Spain. A new study by the consultancy Real Estate Marketing (REM) reveals that six out of 10 Spanish developers are now offering discounts to buyers in an effort to make sales. When indirect discounts are included 71% of developers are offering buyers improved terms.
Along with price discounts, developers are resorting to a raft of other measures to attract buyers, such as better payment terms and mortgage subsidies, along with 'more for your money' deals such as a free garage parking space.
In Alicante on the Costa Blanca 250 residents of Colina La Zenia have been left without water and electricity after being cut off by a developer seeking protection from its creditors.
Financial difficulties have forced the developer to seek voluntary administration before completing the construction work. Now 250 residents who had already moved in, and were living off the builders supply, have been cut off without warning.
None of the properties have a licence of first occupation (LFO) because of the outstanding building work. A town planning official explains that LFOs cannot be issued because the development is not finished. Without an LFO the residents cannot establish private contracts with the utility companies.
The Inmobiliaria Drac real estate group, Mallorca's largest developer, has gone into voluntary administration with debts of close to €700 million. Inmobiliaria Drac has built more than 2,000 properties in The Balearics, and recently expanded to Eastern Europe and The Caribbean.
