Property crisis leads to social housing in luxury new developments

The downturn in the Spanish property market is forcing developers to adopt creative solutions to off load their stock of unsold properties. In some cases this means offering subsidised social housing on luxury golf developments. Bet that was never part of the business plan.

Costa Esuri Ayamonte

For example, the town hall of Ayamonte, on the border with Portugal in the province of Huelva (Costa de la Luz), has signed an agreement with the developer Fadesa, and the CAM savings bank, to offer 47 flats in the Costa Esuri golf development to first time buyers who can’t afford to get on the property ladder.

Fadesa Costa Esuri

Costa Esuri is a big golf development of 6,000 properties on the banks of the river Guadiana. Various developers are building there, but the biggest player is Fadesa (now known as Martinsa-Fadesa, one of Spain’s biggest developers, listed on the stock market, and struggling with a mountain of debt). The Spanish press reports that Fadesa has managed to sell only 1,207 of the 2,150 properties it has already built at Costa Esuri. The project has been heavily marketed to British buyers, and sales are reported to have fallen dramatically in recent months.

The scheme is basically a subsidised rental contract with the option to buy when the rental period expires. Beneficiaries of the scheme are under 35s, single or couples, Spanish resident, on low incomes. The rental period runs for 2 years, with rent fixed at 450 Euros per month. Fadesa has reduced the price by 6,000 Euros for the 47 properties in the scheme.

“After 2 years they have to decide if they want to buy,” Antonio Castillo, the socialist mayor of Ayamonte behind this scheme to provide housing for lower income groups explained to the Spanish press. “If they buy, the first 2 years of rent is deducted from the price, there is no down payment, and mortgage payments for the next 5 years are fixed at 450 Euros per month, subsidised by Martinsa-Fadesa.”

It does sound like a relatively good deal for the beneficiaries of the scheme, who would be getting a reasonably nice place to live in for only 450 Euros a month for the next 7 years. Costa Esuri is a relatively upmarket development, and should be more attractive, and better built, than most social housing projects.

But then again, any young first time buyers taking up the offer will be locked into a price which may turn out to be expensive, depending upon how the market unfolds. That said, they wouldn’t have to commit to buy for another 2 years, which should be enough time to see where the market is heading.

Sadly not for expats in Costa Esuri

Either way, it’s extremely unlikely that anyone reading this will be able to benefit from this scheme. But it might annoy people who have already bought there to learn that subsidised social housing is now coming to Costa Esuri.

Costa Esuri, which is 70% built, has drawn a fair amount of criticism from environmentalists for its enormous size, for disfiguring the landscape, and for its drain on scarce water resources. Some people also complain that it is a ghost town out of season, though over time that should become less of a problem.