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Security in Spain - 6 August 2008

News in recent days and weeks have made gloomy reading for anyone who has been considering buying a property in Spain, but if you look a little below the headlines, it is possible to see that in many ways certain sections of the press are making things seem much worse than they really are.

Long ago, the distinctions between those buying for investment or for leisure paled into insignificance compared to the possibility of losing the property which has been paid for in greater or lesser part as property developers and agents on the Iberian peninsular went bust with increasing regularity. Everyone, it seems, is hanging on to find out if their off-plan property is to be the next project that is threatened with lying incomplete and in the hands of administrators while their deposits and staged payments are left hanging in the ether.

A few weeks ago, an industry already on the ropes was dealt a real body blow with the announcement of the failure of Martinsa-Fadesa, one of the biggest and most influential property developers in Spain. Pessimists were beside themselves with the possibility of projects gathering dust, literally and metaphorically, across the country.

However, things are not necessarily as bad as some reports would have us believe, and it would pay to be mindful of the penchant of the British press to make the worst of a bad situation. Even the well-respected Times was not immune to some less-than-accurate reporting. It said: “Other buyers who have tried to pull out of purchases at Martinsa-Fadesa’s giant Costa Esuri development of 2,184 homes and two 18-hole golf courses on the Costa de la Luz, close to Spain’s border with Portugal, despair of obtaining a refund after waiting months for their money.”

In conversations with Costa de la Luz specialist Andrew Benitz, Director of Titan Properties, the real story comes across.

“The properties constructed by Martinsa-Fadesa within Costa Esuri are now in fact complete and therefore do not pose the risk of being off-plan at the time of the company’s administration. In Costa Esuri all communal areas are established. Unsold apartment / townhouse stock is largely blocked together as Martinsa-Fadesa released property in phases, so the fact that community fees are not being paid on these will not affect the vast majority of purchasers.” He said. Even the commercial units within the development have seen plenty of interest from high-profile retailers, so should be snapped up by a management company when the opportunity arises. The golf courses on the development are already being played and the marina is an approved project, so will likely follow the same path.

“For property buyers within Costa Esuri who have yet to sign the title deeds but are in a position to do so, I would recommend that they instruct their lawyer to inform the administrators of their intention to sign the deeds. The development is now built and there to be enjoyed, so it is largely irrelevant that Martinsa-Fadesa has gone into administration.”

No-one is trying to suggest that the fact that developers of this size are going into administration is a good thing, but the need to panic seems, in this case at least, to be further away than some parts of the press would have us believe.

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