Spain: developers in ‘dire straits’?

Developers in Spain are being forced into drastic action over land prices, claims one company…

According to Spanish Property Insight (SPI), urban land prices are falling in Spain, and developers who are short of cash are being forced to sell in order to make money.

Figures from the Ministry of Housing reveal that the price of land in Spain fell by 2.7 per cent to €277 per square metre in the last quarter of 2007 - A significant drop compared to the same quarter of the previous year.

A spokesperson for the Ministry revealed: “The price of land fell in some areas of the country more than others. Although in some provinces the drop was as little as one per cent, in others it was much higher. In Alicante prices were down by 33 per cent, Córdoba 25 per cent, Barcelona15 per cent, and Málaga 13 per cent”.

A spokesperson for SPI added: “The fall in prices is due to the recent downturn in the Spanish property market as an increasing number of developers are being forced to sell land to raise cash, or face going bankrupt.

“Around a fifth of Spain's housing has been built in the last 10 years to cope with the increasing demand for homes there from British buyers. However, due to the global credit crunch and the fact investors are now choosing to look at housing markets elsewhere, many new developments are now standing empty and properties are not being sold.