170,000 construction sector companies fold in 2 years

The construction sector has been devastated by the real estate bust – the worst in Spain’s history

170,000 companies in the construction sector – 23% of the total – have folded in the last 2 years (2008-2009) reveals a new report from Spain’s Fundación Colegio Libre de Eméritos Universitarios.

The biggest chunk – some 108,000 builders, or 64% of the total – went under in the course of last year.

As is typical of the sector, the vast majority were SMEs with just a handful of employees:

The carnage in the sector is forecast to continue for at least the rest of this year, though the number of builders going to the wall will decline in absolute terms.

The harder they come, the harder they fall

The real estate sector has been hit particularly hard by Spain’s economic crisis:

Of the 4 million companies set up in the decade 1999-2009, 17% were in the construction sector, substantially higher than for other key sectors like tourism. As boom turned to bust, the sector has paid the price of its former exuberance. “As a consequence of the bursting of the real estate bubble, the rate of change in the number of real estate companies has fallen more acutely than the rest of the economy,” explains the report.

Looking forward, the report argues the sector should play a leading, though more sustainable role in the economic recovery, and criticises the government for reducing the infrastructure budget by 6.4 billion Euros this year and next.

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com.