Industry News

Martinsa Fadesa file for administration

Spanish property group Martinsa Fadesa on Tuesday filed for creditor protection with debts of more than €5bn, adding impetus to a stock market sell-off and forcing banks to announce an initial €350m in writedowns related to the company.

Martinsa said in a regulatory filing it had lodged a petition for court administration, marking the start of Spain’s largest ever bankruptcy process since the introduction of new rules in 2004. It follows the rescue in March of Inmobiliaria Colonial by creditor banks, which swapped debt for equity held by the controlling shareholders in Spain’s second-largest real estate company.

After about a decade of booming activity, Spain’s residential housing market collapsed last year amid rising interest rates, oversupply and tougher lending conditions. Many small construction companies and property developers have either filed for protection or have been absorbed by larger groups. Suppliers, meanwhile, have been downsizing. Roca, which makes bathroom equipment, this week announced it was laying off 400 workers. The downturn has also pushed up non-performing loan quotients at Spanish banks, forcing them to step up provisions.

(15-07-2008)



Spanish resale prices fall in the second quarter

Analysis shows that resale house prices in the principal Spanish real estate markets registered price drops during the second quarter of 2008, a faster rate than expected. In Barcelona prices have fallen for the last five quarters and dropped by 1.8% between April and June. Prices in the capital Madrid , registered a decrease of 2.1%, which is the biggest drop since the year 2000.

(26-06-2008)



Morgage repayment difficulties reduce Spanish divorce rate.

Spain’s economic slowdown is helping maintain hundreds of couples together. In order to get through financial difficulties many couples who at one time for arbitrary differences would have taken the quick divorce route are now heeding the age old commitment of for “richer or poorer”. During the first quarter of 2008 some 4,400 divorces were recorded in Madrid, a whopping 22.4% less than the same period of 2007, when nearly 6,000 marriages broke up, according to the general council of the judicial branch.

(23-06-2008)



Negative report warns that the Spain’s crisis may last seven years.

Consulting company R.R. de Acuña & Asociados has prepared the most pessimistic report on the Spanish real estate sector to date. It warns of a "contraction process" lasting between seven to eight years with huge losses for real estate companies, a reduction in the construction of new homes, and a price fall of between 20-30%. It also forecasts that Spain will have a negative GNP in 2009 and unemployment will rise to nearly 12% for the next financial year.

(16-06-2008)



The crisis in Spain will have greater impact than that of 1993

The consultancy IREA predicts that Spains real estate sector's crisis will be "of greater impact than that of 1993 but it will not last as long." Furthermore, they assure that only "those developers capable of defining a debt restructuring strategy and product diversification" will remain unscathed. The upturn in the Spainish mortgage market, the strength of the euro, immigration, the high dependence of the financial markets and the diversification of real estate firms will help bring this crisis to an end.

(08-06-2006)



Europe fast becoming a shoppers paradise.

According to the latest European shopping centre report published by Cushman Wakefield, 2007 was a year "to be remembered" for the retail division because nearly 8.5 million of m2 of shopping space was built. And this trend is set to continue during 2008-2009. Within the next two years another 2.2 million of m2 of shopping space is scheduled to be built in the old continent thanks to the huge development of central and Eastern Europe where the demand for shopping space is on the increase. Last year in Russia alone over 1.84 million m2 of new shopping space was opened. Ukraine, Rumania, Poland and Spain are also developing quickly in this sector. The is situation buoyant in Italy too, with nearly 1.2 million of m2 of new shopping space, a growth of 11.7%.

(06-06-2008)



Italian mortgage holders to get a break

A deal has been struck between the Italian government and the A.B.I. which will allow borrowers to renegotiate the conditions of their mortgage. Mortgage holders will be able to fix monthly variable rate payments at their 2006 level until the end of the loan, when the borrower either pays the excess or gets a rebate from the bank.

The scope to renegotiate will apply to mortgages taken out before January 1, 2007 , and could involve close 1.25 million families.

To further cut the burden upon families, a decision was also made to cut the municipal ICI tax on first homes.

( 25-05-2008 )



Spain advocates an intelligent adjustment

The Spanish housing minister advocates for an intelligent adjustment within the Spanish housing market, and for building only those homes that are strictly necessary.

The Spanish housing minister, Beatriz Corredor, reduced the reforms planned to mitigate the crisis to virtually nothing, when, like Pedro Solbes, the minister of economy, she advocated for not "putting up artificial impediments to the necessary adjustment" of the construction sector, as this would only serve to "postpone the problem". The challenge facing the government is to assure "an intelligent adjustment" and recommended the construction of only those dwellings that are strictly necessary, because a surplus would involve a waste of economic resources and is not environmentally sustainable.

(20-05-2008)



House prices in the US suffer their greatest drop since 1979.

Unfortunately the downward march of the US real estate market seems anything but over. The price of single-family homes in 10 cities fell 13.6% year-on-year, the highest fall since this data began to be recorded in 1987. The cities most seriously affected were Las Vegas and Miami , in which house values fell 22.8% and 21.7%, respectively, in 2007. The inventory of unsold housing is the highest since 1981 and the number of houses built continues to rise.

( 18-05-2008 )



Spanish banks turn down six out of ten new mortgage applications.

The credit crunch and the rise in default on payment has led the Spanish banking sector to become much more selective when it comes to granting mortgages, despite attractive loans still being advertised in the Spanish media. The sector is currently handling mortgage application rejection figures of around 60%, compared to 40% of one year ago. Defaults on mortgage repayments in Spain has now reached a five-year high of 1.12%, but the sector fears that this figure is still to grow with non-payments set to grow over the next 18 months.

(15-05-2008)



Extend Spanish mortgage timelines at no additional cost

The Spanish ministers of the economy and of justice signed an agreement with its banking sector which enables mortgage timelines to be extended without incurring additional costs, thus reducing monthly instalments. This is a measure aimes to reactivate the economy and alleviate mortgage-holder finances. The measure has received certain criticism, as although it reduces the monthly payment today, in the long run it implies paying the bank much more interest.

(29-04-2008)



A million Australians suffering mortgage stress

High interest rates and the global credit crisis are about to make 80,000 Australians lose their homes, according to a study by fujitsu consulting. The company warns that almost a million Australians will have problems to pay their mortgages starting in September after eight consecutive interest rate increases, up to 7.25%, and the data on inflation, which reached its highest rate in 17 years at 4.25%. Mortgage stress is considered as such when a family has to dedicate more than 30% of their income to the mortgage and it is considered severe stress when the mortgage holder cannot pay the mortgage even with refinancing.

(28-04-2008)