The Spanish press reports that Marbella-based home-builder Grupo Otero is in financial trouble with potentially-big implications for numerous foreign investors sold luxury holiday-homes off-plan with aggressive price-discount claims.
The Spanish media outlet El Confidencial reports that Spanish builder and developer Grupo Otero has defaulted on payments to suppliers causing building work to stop on the company’s residential construction sites on the Costa del Sol, calling this a blow to the luxury real estate business on the coast.
According to El Confidencial, cash-flow problems have forced Grupo Otero to stop paying its contractors and suppliers, resulting in them walking off half-finished construction sites. Some are said to be taking away delivered materials in an attempt to recoup costs. Grupo Otero is said to be already behind on payments of millions of euros it owes to its business partners, which could lead to financial ruin for suppliers and contractors.
The article at El Confidencial suggests that Grupo Otero’s executives have admitted they are in financial trouble, but as usual in situations like this suppliers and clients are basically in the dark as to what is going on.
Grupo Otero’s foreign investors
Marbella-based Grupo Otero started life as a builder on the Costa del Sol in 2017, and quickly expanded into luxury second-home development in the same year, going on to create other lines of business like interior design and international sales and marketing in the form of a company Atrium, or Atrium Capital Partners’ as they brand themselves on Facebook and other platforms. Grupo Otero claim they are “leaders in the development of luxury homes on the Costa del Sol” with more than 250m€ invested and more than 190 units built. The group appears to have several websites including otero.com.es, oterogroup.es, and oteromarbella.com.
With an aggressive sales pitch of getting clients “40% below the market price” one of Grupo Otero’s websites is clearly targeting foreign investors looking for new homes and holiday-homes on the Costa del Sol. According to El Confidencial, the biggest group of Grupo Otero’s clients come from the UK, followed by Germany, Nordic countries, and the USA. Along with turnkey building projects they also appear to be marketing their own development projects like La Paloma Collection (pitched as ‘Close to Sotogrande!’) and Oceanic in Duquesa, Manilva, and two new projects called Silk and Camponario, both in Estepona.
Apart from the usual focus on CGIs and renders to give the impression of high-end luxury contemporary villas in a tropical setting the website doesn’t give much away. You have to register to download a brochure, so it’s not clear what kind of purchase structure Grupo Otero are offering their clients. If Grupo Otero is a developer offering clients off-plan purchases with all the mandatory consumer guarantees to protect deposits and stage payments then buyers will get their money back one way or another if Grupo Otero goes under.
However, if Grupo Otero has been selling a self-build model like By Nok, another failed property company on the Costa del Sol, then buyers and investors with could find themselves in a tricky situation, at risk of losing some or all of the money already invested. By Nok also lured clients with claims of massive price savings and discounts to market price, so once again it looks like a case of a Costa del Sol builder promising juicy discounts whilst actually serving up high risks.