The economic crisis buffeting Spain sent the number of bankruptcies soaring by 182% to 2,864 in 2008, 38% of them in the real estate sector, reveals a new report from PricewaterhoueCoopers.
“Between October and December there were more insolvency proceedings than in all of 2007,” says the report, which warns that the commercial courts could collapse under the workload if this trend continues in 2009.
Bankruptcies amongst developers and brokers rose from 74 in 2007 to 387 in 2008, and in the construction sector from 182 to 692.
The rapidly rising number of property companies being forced into administration, like Martinsa-Fadesa, is likely to have a significant impact on the market. At the very least it should encourage a ‘flight to quality’ amongst buyers looking to avoid the nightmare of dealing with a developer who goes bust.
The biggest insolvency proceedings so far are as follows:
– Martinsa-Fadesa. A developer that had sales operations in the UK, and has debts of 6.8 billion Euros.
– Promociones Habitat. A Barcelona-based developer with debts of 1.7 billion Euros.
– Tremón. A developer with projects on the Costa del Sol, and debts of close to 900 million Euros.
– Labaro. A Madrid-based developer active all over Spain with debts of 580 million Euros