Demolition property pain in Spain

The public relations contrast between Dubai and Spain was emphasised quickly enough in the first week of 2010 when the world’s tallest building went up amid a blaze of world publicity and the new homes of Brit buyers were battered down by bulldozers.

The rulers of Dubai called up 10,000 fireworks, sky divers and a laser light show to shore-up their broken property sector and tell property buyers the market would return and their investment would pay-off.

Town halls in Costa de la Luz and Almeria called up the bulldozers to demolish new homes, legally licensed by a previous corrupt administration. The negative message was summed up in media headlines like “Happy New Year – we’re going to bulldoze your homes” whereas Dubai got positive coverage worldwide.

The house-building industry is vital to the economies of both countries but is decimated by over-supply and recessional woes. Every sale is important to Spain and Dubai and these need confidence in the market. Some buyers will get their fingers burned in both countries as prices have dropped by 30% or more, but for others, that is an opportunity to buy in cheaply, sit back, ride the storm and get a decent return in 3-5 years.

Spanish property experts have warned about the illegal building in Almeria and Costa de Luz for years and early buyers moved in to homes with only builders’ supply of power and water. They often lost even this when the builder went bust or pulled the plug.

The Socialist Spanish Government has done little to help and has largely stood back as new regimes in the town halls have been left to their dirty work. They intervened directly in Marbella where 1,000s of illegal properties (corrupt and jailed town hall officials) have been made legal retrospectively and a massive dossier of these is available to the lawyers of all prospective purchasers.

That is good for the market, provides reassurance to buyers who can now snap up repossession bargains from Spanish banks and hard-pressed developers keen to unload completed stock.

But to ignore the plight of innocent buyers in other areas seems suicidal; to allow new rival on the block Dubai to provide added confidence to buyers while failing to follow suit, results in more pain and new questions on the safety and stability of the Spanish property market.

According to Abusos Urbanísticos Almanzora NO, a local group (see image above) representing homeowners with “precarious legal status” in the area “the authorities still fail to recognize the enormous damage that this scandal has caused to Spain’s reputation both at home and abroad.”

Local municipalities' insistence on tearing down the homes of owners who purchased their property in good faith is “economic suicide,” the organization argues. Negative publicity alone should make the Government and authorities rethink the threats, Spanish honour should result in full, immediate compensation for owners and all illegal development should be listed online.