Spain’s Martinsa Fadesa files for bankruptcy

Spanish property developer Martinsa Fadesa said on Monday it would file for liquidation bankruptcy in one of the country's biggest insolvencies, which comes as the sector shows signs of recovery from a 2008 real estate collapse.

Spain's Martinsa Fadesa files for bankruptcy
Stalled construction on a building project by Martinsa Fadesa. Photo: Pedro Armestre / AFP

The company, a symbol of the excesses that led to the country's property sector collapse, said in a regulatory filing that its board had decided on the move after failing to win support from banks for its latest debt repayment plan.

Martinsa Fadesa, a builder of homes, malls and golf courses which is active mainly in Europe, said Friday it holds assets worth €2.4 billion ($2.7 billion) to meet debts worth €7.0 billion, making its collapse one of the biggest bankruptcies in Spanish history.

The company sought voluntary creditor protection in July 2008 after it failed to get a loan to refinance its debt and became the first major casualty of the crisis in Spain's housing market.

It spent almost three years under creditor protection before reaching an agreement with its lenders in March 2011.

As part of the accord, the company agreed to make annual debt payments for eight years and sell assets, but it has struggled to make payments.

The company had until February 26 to reach a new accord with its lenders, but 75 percent of its creditors declined its proposal, according to Spanish media reports.

Banco Popular, Abanca, Caixabank and Spain's so-called "bad bank" Sareb, which was set up to cleanse Spain's rescued banks of their soured property loans and real estate, all rejected Martinsa Fadesa's plan, the reports said.

"These institutions should not be affected since they have already made large provisions and set up bodies to manage assets," said Pablo Kindelan of global real estate consultancy Pablo Kindelan.

Martinsa Fadesa was formed in 2007, at the height of Spain's property boom, through Martinsa's debt-financed takeover of Fadesa for over €4.0 billion, which created one of Spain's largest real estate firms.

The following year, Spain's decade-long property bubble collapsed due to rising interest rates, more restrictive lending standards and oversupply.

Spain, the eurozone's fourth-largest economy, plunged into recession when the property bubble burst, forcing the government to bail out the financial system and enforce austerity measures that left one in four workers nationwide unemployed.

Like Martinsa Fadesa, several other large real estate firms have declared bankruptcy in recent years, such as Sacresa, which was saddled with €1.8 billion in debt, and Reyal Urbis, which drowned under a debt pile of over €3.6 billion.

But analysts said it could be the last major insolvency of a property firm as a result of the 2008 property bubble collapse.

Spanish home sales increased last year for the first time since 2010, adding to signs that the property market is recovering from the worst recession in the country's democratic history.

Transactions rose by 2.2 percent from a year earlier to 319,389 units, according to figures from the National Statistics Institute.

While home prices fell 2.7 percent last year, taking them to almost 42 percent below their peak in 2007, according to Spain's largest home appraiser Tinsa, prices are rising in major cities such as Madrid and Barcelona along with demand.

The renewed interest in Spanish property was underscored in June when China's richest man, Wang Jianling, bought a historic Madrid skyscraper, the 25-storey Edificio Espana or Spain Building, which has stood empty for years.

He paid Spain's biggest bank Santander €265 million for the building.

The news that Martinsa Fadesa will seek liquidation "does not represent the situation of the market right now, it is more of an echo of another era," said Kindelan.

"The market has changed course, like the rest of the economy, with the arrival of more liquidity. The situation is still fragile and unequal, depending on the region and the sectors," he added.

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REVEALED: The cheapest most in-demand areas in Spain to buy a house

If you're considering making the move and buying property in Spain, but don't fancy purchasing in a rural village in the middle of nowhere, you should know where the cheapest, most in-demand parts of the country are.

REVEALED: The cheapest most in-demand areas in Spain to buy a house

If you’re thinking about relocating, Spain is a fantastic place to do it. Foreigners have been moving to Spain for decades, not only for its fantastic food and weather, along with a laid-back lifestyle, but housing is generally affordable – if you know where to look.

Though the rise in the Euribor has sent interest rates spiking, house prices in Spain are expected to flatten somewhat in 2023 and it could be a good year to find a bargain, depending on your financial situation.

Knowing what type of house you want and where in Spain you want to live is one thing, but knowing the cheapest, yet most in-demand parts of the country could really help you narrow down your search.

Fortunately, Spain’s leading property website Idealista has put together a list of the most ‘in demand’ municipalities of Spain and where you can find the most expensive and, more importantly for the house hunters among us, the cheapest municipalities of Spain to buy property.

It’s based on data from the last quarter of 2022 and is the average price of housing in towns with more than 1,300 sale announcements and costs valued at more than €1,100 per square metre. 

You can find the ten cheapest areas of Spain to buy property by average price below, but it’s worth noting that Idealista did these rankings by average price across the entire municipality, so there are likely individual towns and villages dotted around Spain where prices are significantly lower.

That said, this list gives you a good idea of the areas to look out for.

READ ALSO:  What will happen with property prices in Spain in 2023?

The 10 cheapest municipalities in Spain to buy property 

Santa Pola (Alicante) – Santa Pola, in the Alicante province, is the cheapest most in-demand municipality to buy a house, according to Idealista’s rankings. The average price for a house in Santa Pola costs just €151,796, though this may come as a surprise given its prime location in a foreign hotspot on the sought-after Costa Blanca. The main town of Santa Pola itself is a small beachfront community with a population of around 35,000. It also has a large foreign population and is a short drive or bus away from both Alicante and Elche.

Ourense (Galicia) – Next on the list is Ourense in Galicia where the average price is €154,941. The municipality is home to several towns and villages, surrounding the main medium-sized town of Ourense itself in southern Galicia. The town has a population of around 105,000 and is a little over an hour’s drive from both Santiago de Compostela and the coastal city of Pontevedra.

Oviedo (Asturias) – Third on the list is the municipality of Oviedo where you’ll pay an average of €154,968 for a property. Another area in northern Spain, the main city Oviedo itself, which is the capital of Asturias and has a population of 220,000. It sits between Cantabrian mountains and the Bay of Biscay. It’s known for its picturesque medieval old town and impressive architecture. 

Jerez de la Frontera (Cádiz) – Properties cost an average of €155,563 in the municipality of Jerez de la Frontera, or Jerez as it’s commonly referred to. It’s located in the Cádiz province of Andalusia and is a real piece of ‘traditional’ Spain. Jerez city is a decent-sized place with a little over 200,000 people and is known for horses, flamenco dancing and sherry, as well as the Alcázar de Jerez, an 11th-century fortress that harks back to Andalusia’s Moorish past.

READ ALSO: Is it better to buy or rent in Spain right now?

Torrevieja (Alicante) – Another municipality in Alicante and another incredibly popular with foreign homeowners. Properties here go for an average of €155,787. Torrevieja itself has a population of 82,000 and is another coastal town, but also has nature trails and salt plains nearby.

Murcia (Murcia) – Murcia is often overlooked, wedged between Alicante and Andalusia, but you could grab a bargain here with average prices of €157,119. Murcia capital is a bustling city of almost 450,000 people, and is strategically placed for trips to the Costa Blanca, Costa Calida, Costa del Sol, and Costa de Almeria.

Parla (Madrid) – The municipality of Parla lies just 20km south of Madrid and the town of the same name is home to 130,000 residents. It’s a great commuter area for those who work in Getafe or the capital. A house here costs an average of €160,652. 

Salamanca (Castilla y León) – The municipality of Salamanca surrounds the capital of Salamanca in Castilla y León in northwestern Spain. Buying a property in this area costs an average of €162,909. The main city of Salamanca is known for its university, which is the oldest in Spain and dates back to 1218. Understandably, much of Salamanca’s roughly 150,000 residents are students, which gives the town a lively atmosphere.

Burgos (Castilla y León) – Another northwestern Castilla y León municipality, is Burgos has around, where you can buy a house for just €163,164. The city of Burgos has around 180,000 inhabitants and is known for its medieval architecture and grand cathedral. 

Dos Hermanas (Sevilla) – The second most populous municipality in the province of Seville, properties cost an average of €163.274 here. The Andalusian town is just 15km south of Seville, making it great for commuters or those who want plenty of culture nearby.