Discounts of up to 30% at Sotogrande’s remarkable marina development Ribera del Marlin

Sotogrande Ribera del Marlin

Sotogrande Ribera del Marlin

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A recent article in El Pais reports on the problems experienced by people who bought flats in the Torre Lugano skyscraper – the 2nd highest in Benidorm with 148 metres, 48 floors, and 204 flats (it was marketed as the highest residential building in Spain, but has since been overtaken by the Gran Hotel Bali in Benidorm at 186m).

Furious owners claim the finish is far below spec and multiple construction faults have come to light since the building was delivered in June 2008, a year and a half late. A group of them are taking the developer, builder, architect, and technical architects to court demanding compensation of 28 million Euros.

The owners complain that:

- The building standards are shoddy, and corners were cut.
- The developer cut costs using inferior materials to those promised in the spec. For example, chipboard or cardboard was used in place of wood.
- Thanks to poor construction, the stairs to the offices have been sealed off in danger of collapse.
- The fire alarm never worked properly (towering inferno anyone?). Sometime it goes off up to 50 times a day.
- Construction faults in the foundations cause regular flooding in the garage, often involving waste water (sewage).
- Owners have had to spend 600,000 Euros dealing with these and other problems.

Vicente Villalba, the vice-president of the community of owners, says he feels “swindled”. “I was promised a luxury flat but it has ended up a disaster because almost nothing is up to scratch,” he told El Pais.

As a protest, the majority of owners are reported to have hung a for sale sign outside their flats.

Prices range from €160,000 for small lower floor flats, to €710,000 for the penthouses. The symbolic protest aside, 50 flats, or 25% of the building, are for sale, and that’s before counting those still on offer from the developer.

The owners are also suing the developer for building 5 floors more than urban planning laws permit.

The developer is a JV between Acciona – one of Spain’s biggest developers and constructors – and the Valencian savings bank Bancaja.

Publicity

With Spanish property prices already back to where they were in 2005,this means that buying a top-quality holiday home from one of Spain’s most reputable and reliable builders just got even cheaper. The offer will save more than 10,000 Euros on already heavily discounted prices, making this the best time to buy in years.

But miss the opportunity and you will see prices go up by 8%, as the Spanish government raises VAT on new homes from 7% to 8% from the 1st of July.

It’s not often you come across an offer that saves you more than 10,000 Euros for superb quality design and build in some of Spain’s most desirable locations like Mallorca and Calpe in the Costa Blanca. But it only lasts 2 months and time is going buy, so don’t delay and click the following links for more information on this hot offer from the Taylor Wimpey website:

Calpesol & Montesol – Costa Blanca
Pollentia Mar & Puerto II – Mallorca

Or call now on (UK) 08000 121 020

Corvera Golf and Country Club from the air

A group of 10 British buyers is taking legal action against Calidona, the developer of Corvera Golf and Country Club in Murcia, arguing breach of contract and demanding their money back. The group are represented by Irwin Mitchell, a firm of British solicitors with offices in Spain.

The buyers are also worried they may lose all their money – in some cases the bulk of their life’s savings – if the developer of the resort goes bust like hundreds of other Spanish developers in recent times.

With the Spanish property market in crisis, this is a real risk. Listed Spanish property developer Martinsa-Fadesa, for example, has been forced to seek protection from its creditors, leaving numerous British clients without a home to show for their money, whilst Murcia’s mega-developer Polaris World narrowly avoided bankruptcy proceedings only last week.

Off-plan buyers at Corvera Golf have paid deposits and stage payments of up to 200,000 Euros for homes costing between 190,000 and 550,000 Euros. Irwin Mitchell believe that more than 100 British clients could be affected by Calidona’s alleged financial troubles and failure to deliver on spec. The developer is now said to be chasing clients for further payments.

Breach of contract

Irwin Mitchell argue the developer is in breach of contract for not having built luxury facilities that were promised at the time of sale, for example “a five star hotel, in-door swimming pool, spa, medical centre, equestrian centre, leisure facilities and tennis courts, as well as a commercial centre with bars, restaurant and shops.”

“The group claim that none of the five star leisure facilities have been built, and that they are now being chased for final payment and face the threat of being sued under Spanish law by the developers Corvera Golf and Country Club, SL, despite being informed that building licences are not even in place for some facilities,” explain Irwin Mitchell.

“And to add to their concerns, they also fear that the failure to build the facilities on this and on a previous site, Roda Golf, is a sign that the developers have run out of money and may go bust, taking the group’s hard-earned money with them.”

Solicitor Alex Radford, from Irwin Mitchell Abogados in Malaga – the Spanish arm of UK law firm Irwin Mitchell – said the issue was of increasing concern to a growing number of people who had committed hard-earned money in Corvera, and who travelled to the emergency meeting in Birmingham from across the country.

Radford said: “This is obviously a very worrying time for all of these people. Buying a property in Spain is a big decision. These people have worked hard to earn the money to buy these homes and saved for a very long time. To pay out this money was a decision they would not have taken lightly.

“Misled by the developers”

“Having done that, quite rightly, they expect to receive what they have paid for. They have been promised five star facilities to go with their homes, and they have been very badly let down indeed. Clearly they have been misled by the developers, and we want to get justice for them.

“These people want their money back or all the facilities they were promised to be built – it really is as simple as that. We believe the developers are in a breach of contract because of the lack of facilities that they said they would build when they first sold homes to our clients and a large number of other people who have also invested hard-earned money in a deal the developers haven’t honoured.”

For more information visit Leeds Man Among Spanish Home Buyers Taking Legal Action Over Property Firm Collapse Fears

Marina D'Or on the Costa Azahar

The Regional Government of Valencia (the Generalitat) has given the go-ahead to a massive enlargement of the Marina D’Or development on the Costa Azahar. Marina D’Or Golf, as the project is called, is now the biggest residential planning scheme in Europe, and its approval coincides with the biggest property crash in Spain’s history.

Located north of Valencia City, in the municipalities of Cabanes and Oropesa, the self-styled “Holiday City” developed by Jesus Ger will cover 18 million square metres of land, including 3 golf courses, numerous hotels, a theme park, indoor ski slopes, and more than 30,000 homes, 20% of which will be social housing.

According to Spanish press reports, the developer plans to start building the 3 golf courses first, leaving the homes for when the property market recovers.

Marina D'Or

Mundo delusion?

The plans include a theme park called Mundo Ilusión, to be developed by the Generalitat, on 800,000 meters of land provided by the Marina D’Or Group. Mundo Ilusion is the pet project of Carlos Fabra, the long-standing president of the provincial government of Castellón.

Jesus Ger, the boss of Marina D’Or, has called on the Generalitat to start work on the Mundo Ilusión theme park to encourage tourists to visit. Ger argues the government should get behind the project like it did with Terra Mítica in Alicante.

No matter that Terra Mítica has been a commercial failure and waste of public money, as opposition politicians like Marina Albiol of the EUPV claim. “We continue to think that Mundo Ilusión makes no sense; everything suggests it will be a financial failure,” Albiol told the Spanish press, saying her party will oppose another “drain of public money as happened with Terra Mítica.”

Marina D'Or expansion site

Polaris World development in Murcia

Spanish holiday-home developer Polaris World has narrowly avoided bankruptcy proceedings after reaching an agreement with its creditors at the eleventh hour

Murcia-based Polaris World, the biggest holiday home developer in Spain, last night reached a deal with its banking creditors just before a deadline that would have forced the company to seek court protection from its creditors. The sticking point that held up an agreement was how the value Polaris World’s assets in Murcia such as land.

After 4 months of teetering on the brink of bankruptcy, PW convinced 4 of its lenders – CAM, Bancaja, Banco Popular and Banco de Valencia – to buy finished homes, golf courses, land, and hotels, in return for 83 million Euros, giving the developer a much needed shot of liquidity that it hopes will tide it over until the market picks up.

The Spanish press reports that signs of economic recovery in the UK and Germany suggest that a recovery in holiday home sales will not be far behind.

This is the second time in less than a year that Polaris World has avoided bankruptcy proceedings. Las autumn it negotiated a 900 million Euros debt-for-land exchange with its banking creditors. As a result its creditors now have to work out what to do with 6 million square metres of land in Alhama, Murcia.

PW was founded in 2001 by local builders Pedro García Meroño and Facundo Armero. Armero sold out to Credit Suisse in 2006 for 500 million Euros. Meroño is now the largest shareholder, and José Luis Hernández is the company president.

PW has 7 golf developments in Murcia: Mar Menor Golf Resort, La Torre Golf Resort, El Valle Golf Resort, Hacienda Riquelme, Condado de Alhama, La Loma Golf Resort and Las Terrazas. At the top of the boom its turnover was more than 800 million Euros, with more than 2,000 employees (now down to 700 or less).

Setting aside the clients and contractors suffering as a result of the company’s financial problems, the big losers in this drama are the banks and cajas who lent the company money. All told they have agreed to swap more than a billion Euros of debt in return for assets of dubious value such as land in the Murcian back of beyond.

Polaris World Golf resort in Murcia

Time is running out for Spanish holiday-home developer Polaris World. It now has just 10 days to reach a deal with its creditors before it is forced to seek protection from them in court administration, reports the financial news site Eleconomista.es. Court administration is often the first step towards bankruptcy.

Polaris World has already managed to renegotiate 900 million Euros of its more than 1.2 billion Euros of debt. The sticking point is just 85 million Euros, a relatively small amount compared to the company’s overall debts.

Polaris World took the first step towards bankruptcy proceedings back in December last year, when it took advantage of a provision in the law giving companies in financial distress 3 months of breathing space to negotiate with creditors, in the hope of avoiding the more drastic step of court administration. The deadline passed on March 22, but PW announced would continue negotiating for another month, during which time it should have gone into administration, in theory.

Murcia-based Polaris World, Spain’s biggest holiday home and golf course developer, has now run out of room for manoeuvre. A deal must be reached in the next 10 days or the company, controlled for the time being by Pedro Maroño and Credit Suisse, has to file for court protection.

Slashing costs

Eleconomista reports that, in the meantime, the company is desperately trying to slash costs by shrinking its structure. It is reportedly liquidating 50 of the 70 companies in the group, selling all non-core businesses to raise money and focus on development.

What happens if PW go into administration? Well, for a start, there will be another wave of buyers trying to get out of their purchase contracts, which will just aggravate the company’s financial difficulties.

Right now, the only game in town is managing debt levels. In total, Spain’s developers have a combined debt of 323 billion euros, or about 30% of Spanish GDP, according to the Bank of Spain. Around 9% of that, some 29 billion Euros, is owed by the biggest 8 listed developers, including companies like Martinsa-Fadesa that are already in court administration, unable to meet their debt payments. All these developers are essentially now in the business of flogging assets and renegotiating debts, not building homes. Makes you wonder if they should still be referred to as developers, if they don’t actually develop anything.

Unfortunately, negotiations between the banks and developers seem to have focused more on kicking the can down the road then solving the real problem – the over-valuation of asset prices. The pattern is familiar: They reach an agreement for debt repayments but months later it unravels and they have to start over. One has to assume that even they know they are wasting time. It’s obvious to everyone else.

And the longer they put off effective solutions, the longer the Spanish economy will suffer. Billions of euros are tied up in unproductive loans instead of financing productive business and creating jobs. Officially the bad-debt ratio of developers is 10% (32.5 billion euros), but I suspect it is much, much higher than that.

Also in the news today a report from a company called Solchaga Recio & Asociados claiming that, if Spain’s savings banks had to sell the collateral of their loans to developers, “they might recognise serious losses that, in some cases, they would not be able to cope with.”

Polaris World Golf resort in Murcia

Polaris World, Spain’s biggest developer of golf resorts, has 3 months to negotiate an “amicable” solution with its creditors after admitting that it has “temporary liquidity problems in some of its subsidiaries.”

If no agreement is reached in the 3 month period, Polaris World will be forced to seek court protection from its creditors, following in the footsteps of other big Spanish developers like Martinsa-Fadesa.

Back in the summer of 2009, when Polaris World was renegotiating its debts with its main banking creditors, it was reported to have debts of 900 million Euros. Today the company claims it “only” owes 100 million Euros.

But the company is also having to deal with demands for payment from its contractors. Polaris World hopes to use this 3 months period to “amicably resolve the debts it has with them.”

Polaris World is made up of more than 20 divisions developing residential golf resorts and offering associated services. According to the company all divisions are “up to date with payments, and hoping to go forward without being forced to seek court protection from creditors.”

But according to a recent article in the Spanish daily El Pais, up to 15 of Polaris World’s subsidiaries are in a state of insolvency. Among them the management companies of resorts Hacienda Verde, El Valle Golf, Hacienda Riquelme and Alhama Golf, and hotels Mar Menor, Golf Hotel y La Torre Polaris Hotel.

Polaris World has developed 5 golf resorts in Murcia since its launch in 2001, with 65% of sales reportedly to retired British investors.

There is some basis for the developer’s optimism in the latest sales figures from the National Institute of Statistics. Sales of newly built properties increased by 7.6% from August to September, though on an annualised basis sales were down 20%.

“It’s been comforting to see sales rise for the 5th consecutive month, something that means we can say that the sector is recovering since it touched bottom in April,” Pérez told the Spanish press.

Sales are bouncing back thanks to lower prices and more selective mortgage lending by banks, argue the developers.

The recovery in sales will continue in the months ahead, says Pérez, in part because developers will make “every effort possible” to make prices more attractive.