Spain’s developers slow death
We are exposed to reading about the Spanish property market every now and then, but what do you know about the derivative of the property market, ie the constructions business in Spain? It is a painful, slow death, that is still very much alive. From Bloomberg.
“My business is being made obsolete,” said Fernandez, who bids for equipment on behalf of Spanish construction companies. “When the crisis began in 2008, we all thought that it would be over in two or three years, but we got to 2011 and realized we were in worse shape.”
Almost half of Spain’s 67,000 developers are insolvent but not bankrupt after getting additional financing from banks, according to R.R. de Acuna & Asociados, a property consulting firm. Extending the lives of companies is becoming harder for banks after Prime Minister Mariano Rajoy’s government demanded they set more money aside to cover losses on real estate loans.
Fernandez points out unused gear made in 2009 on sale at the Sept. 13-14 auction. He said it had remained unsold after distributors ordered stock for sales that never materialized. He was authorized to bid as much as 70,000 euros ($90,000) for a tractor and went home empty-handed after another buyer offered 82,500 euros.
“Construction in Spain ground to a halt four years ago, but banks chose to refinance initially, which is a slow death,” Jeroen Rijk, senior vice president of European sales for Ritchie Bros., said at the auction. “They aren’t doing that anymore, which is why there is so much product on the market now. Spain definitely ranks top of the class for overdoing it.”
Full article here.