Spain: Elections Dominated by Economic Downturn

Spain is set to elect a new government on March 9. After the bursting of the real estate bubble, the economy has witnessed a pronounced slowdown. As a result, economic issues have dominated the campaign. It is still anybody’s guess as to whether the ruling Socialist Party or the opposition Partido Popular will emerge victorious.

An interview with Adrian Zürcher, Credit Suisse Global Equity Strategist, about Spain’s economic outlook after the election:

Spain's Habitat Refinances Loan After Breaching Terms

Habitat, which borrowed to buy a unit of Madrid-based builder Grupo Ferrovial SA in 2006, needs the loan after violating terms of debt agreements by missing earnings and sales targets. The company, the biggest real-estate borrower to seek new financing as Spain's decade-long property boom ends, will agree to sell assets to pay part of the seven-year loans, the bankers said.

Twin Falls SL, the Spanish real-estate venture part-owned by Merrill Lynch & Co., sought court protection from creditors in Madrid last week.

Spanish Developer Leaves Projects Unfinished

A major Spanish development company has dropped a number of building projects which were currently underway in the Valencia region, according to reports in the Costa Blanca News.

Hundreds of families, who have purchased properties off-plan in Olocau, near Valencia, found out last week that all contact with Vanguard Investment had been terminated.

Own an entire estate in Spain

The Spanish property market has been in the headlines consistently throughout the latter half of 2007 and all the way into 2008. Media reports currently vacillate between highlighting negative issues such as the over-supply of apartments in some locations which has had a detrimental effect on pricing, and focusing on the evergreen and unshakable positive factors that make Spain a consistently popular location with property buyers, retirees and expatriates.

Spanish Tax Authorities to Probe Real Estate Fraud

Spanish tax authorities have started inspecting 82,000 real estate developments for signs of fraud, reported the Spanish daily El Pais.

If prices declared for the sale of properties are about the same or lower than the costs incurred by developers, that could indicate fraud, the newspaper said, citing Luis Pedroche, director of Spain's tax agency.

Northern Portuguese Villas

Is the Algarve property investment market about to burst or already bursting despite the well polished real estate sales industry's best efforts? Portugal as a whole is widely cited as being the best property investment country in western Europe, however conditions for the Algarve are looking a little shaky. Minho Villas is a sales site for one of the most prestigious "quinta" villas on the northern border with Spain and offers a very different real estate investment opportunity to the Algarve.

Spain is not in economic crisis

The 47-year-old prime minister says his Socialist government long predicted a housing market correction and is not to blame for economic fallout from the United States.
"We have a slowdown because of the real estate sector, this is well known, it has problems," said Zapatero. "In all other sectors the economy has absolute strength to absorb and continue absorbing these job losses."

Dubai Investor Eyes Spain's Colonial

Colonial is Spain's second-largest real-estate company by assets and has been hit hard by tightening financial conditions and sharply slowing new home sales. The company's low share price has fueled interest in a possible takeover of the company. It lost 62% of its value last year amid growing fears of a sector slowdown. In the face of a declining share price, banks in late December started unloading shares. The shares have retreated 12% this year.