Polaris World, one of Spain’s biggest property developers, and one of the biggest in the world when it comes to residential golf resorts, is reported to be negotiating a debt-for-property swap with its bank creditors, according to articles in the Spanish press today.
Polaris World aims to reduce its financing costs to cope with the property market collapse and fall in tourism. Holiday home sales in Spain have been particularly badly hit by the credit crunch and the recession, creating a massive glut of newly built holiday homes.
Polaris World’s biggest creditors include Banco Popular and Banco de Valencia, and local savings banks Bancaja, CAM, and Cajamurcia. The company’s most recent loans total almost 900 million Euros, reports Murcia’s local paper La Verdad.
The Spanish business daily Cinco Días reports that the company’s creditors may take control of the majority of Polaris World residential complexes, leaving Polaris World with its apartment and hotel businesses. On the other hand, La Verdad reports that none of the company’s resorts are on the negotiating table, just some of its properties and its land bank.
Spanish developer Polaris World is also changing its commercial strategy to cope with the property downturn and the decline in British demand. According to recent comments by Alfonso Jordán, managing director of the Polaris World hotel business, the company is refocusing its hotel and resorts business away from the UK and towards the local market in response to the fall in demand from British property investors and tourists.
Polaris World says it is investing 350 million Euros in its tourism business, which includes two 5-star hotels, 4 golf courses, and 200 tourist apartments, with a total of 500 rooms in Murcia under management.
Taking into account the change of strategy, Polaris World expects to achieve an occupancy rate of 60% this year.
It remains to be seen whether there is sufficient interest amongst Spanish holiday makers for the Polaris World product of golf resorts a long way from the beach. History would say not.
Furthermore, Spain has its own economic problems, with unemployment heading for 20%, and it is hard to imagine that Spanish tourists are in a position to rescue anyone.