Reply To: More Bad news for Spanish Property!


Developers have forgotten that prices go down as well as up. Their usual reply when someone asks for discounts is that – wait for it – “they don’t need the money”. Yeah I know…..

Having introduced a client recently to a well known developer – not that one on the television, he offered a deal which would have taken the developers entire key ready stock for a discount, in return he would pay a substantial amount of cash in their hand. Bearing in mind that some of the units had been completed, empty and unsold for almost a year, they still took three weeks to turn the deal down.

I have experienced a kind of arrogance with almost all Spanish developers who simply are not commercially minded. They honestly think that no matter how long it takes, their stock will some day get sold for the price they want.

The developers I have known simply have one rule when it comes to economics, cost plus profit = selling price. Whatever the costs involved is not their concern, it is the buyer who has to foot the bill. Now of course, Spain is waking up to a new kind of economics, which is no matter what it costs, the market value is a fickle thing and properties are only worth what someone is willing to pay. Before that was almost anything, now this is not the case.

So the next time you hear another developer go bankrupt or seek bankruptcy protection, remember, they have probably realised that they did actually need the money after all and it was just bravado – unfortunately, bravado doesn’t pay the bills!