The eye-watering Marina d’Or mega-development on the Costa Azahar, in Castellón Province (Valencian Community) has gone into voluntary administration, in the latest sign that Spain’s real estate crisis is not over despite recent headlines in the media.

Comercializadora Mediterránea de Viviendas, the real estate business of Marina d’Or, has been forced to seek protection from its creditors with debts of 681 million Euros, 546 million Euros of which are owed to banks, according to reports in the Spanish financial press.

Marina d’Or is a family business set up three decades ago by Barcelona-born Jesus Ger, who started out selling domestic appliances on the coast of Castellón Province, popularly known as the Costa del Azahar. Ger switched to real estate, and developed Marina d’Or on virgin coastline, marketing it as a “Holiday City”. Marina d’Or is one of the biggest high-density projects on the Spanish coast, and many of the homes and shops in the complex now stand empty, according to press reports.

Controversial planning model

Marina d’Or is the epitome of Spain’s high-density planning model, a model that many would argue has blighted large swathes of the Spanish coast. Built despite the fatuous Ley de Costas, Marina d’Or is a sparsely populated in winter, and over-crowded in summer, which should raises question about sustainability of its business model in the long-run.

Marina d’Or benefited enormously from the indiscriminate appetite for real estate during last decade’s boom, and was marketed nationally with celebrity endorsements in primetime TV campaigns appealing to lower-middle class Spanish buyers from interior cities like Madrid and Zaragoza. Despite its downmarket target clients, prices rose spectacularly, and smashed through the €200,000 barrier for 2-bed apartments off-plan. You can now find a good selection of 2-bed apartments for sale below €80,000.

The dangers of a high-density model like Marina d’Or’s become clear when boom turns to bust. Vendors find they are just one of many, and have no negotiating power. A quick comparison between Marina d’Or and Ibiza illustrates this danger. There are currently 514 properties currently for sale in Marina d’Or (Idealista search), compared to just 278 properties on the market in the whole of Ibiza’s capital. Vendor’s in Ibiza are in a much stronger position than vendors in Marina d’Or.

Marina d’Or also opened its own sales offices in prime spots of European capitals like London’s Oxford Street, so no doubt a number of foreign buyers will now be wondering what will happen to their investments with the developer of such a large complex now in administration. For guidance read a Legal Guide to Buying Off-plan Property in Spain and What to do if your Spanish Property Developer Goes Bust.

The hotel business of Marina d’Or, with five hotels in the complex, was controversially spun off in 2010, when things started to go wrong. Though still owned by the Ger family the hotel assets have not been dragged into the bankruptcy proceedings.

With Marina d’Or’s developer in administration, it’s now even harder to see any future for Jesus Ger’s Mundo Ilusión town planning project between the municipalities of Oropesa and Cabanes. Known as Marina d’Or Golf, this proposed six-billion-Euro-development, to be built over three decades, makes Marina d’Or look like something Price Charles would developed in comparison. The plan covers 18.8 million square metres of land, including three golf courses, seven themed hotels, various theme parks, and 35,000 homes. However, the plan was struck down by the Valencian courts in January this year for failing to comply with environmental regulations, so the developer’s current financial problems are just another nail in the coffin.

Despite Marina d’Or being the flagship development for property on the Costa Azahar, the region offers one of Spain’s most attractive yet least known coasts. There is another side to the Costa del Azahar.