Murcia's credit-fuelled building spree ends in rash of repossessions, empty villas and roads to nowhere
Spain's building boom once enticed investors hoping to profit from the
popularity of the country's southern regions. Photograph: Miles Brignall
MURCIA.- They were once Europe's most ambitious holiday homes projects, vast developments financed by supersized loans from Spain's
cajas and banks. The properties were widely advertised on television in
the UK to entice investors chasing the good life in the sun and hoping
to profit from the property boom.
But five years on, the Polaris
World holiday dream of sun-drenched apartments overlooking golf courses
designed by Jack Nicklaus has turned sour. Apartments that once sold
for €200,000 (£160,000) are struggling to fetch €60,000. The last
resorts built are now ghost villages.
Welcome to Murcia, the very
heart of Spain's property boom and bust, where repossessions are
sweeping the region and where losses are straining balance sheets of
almost every Spanish bank.
The drive along the dual carriageway
from Murcia airport into desert-like scrub of the hinterland is a
journey through the hubris of the credit-fuelled building boom, back to a
time when more cement was mixed in Spain than in every other European
country combined. Either side of the road lie unfinished and
repossessed, golf resort developments.
Good roads complete with
zebra crossings built to link homes that have never been constructed,
simply stop in the middle of nowhere. Conference centres lie unused on
the edge of vacant developments. Stores, restaurants and sports
facilities have failed to materialise as the developers have run out of
cash. Those who bought "luxury' villas for €1m in the good times would
be lucky to get a third for them now – if, that is, they could ever find
a buyer happy to tolerate living on an unfinished complex.
At the
heart of the boom was Polaris World, which built seven resorts on the
Costa Calida, and inspired a number of copycat developments in what was
once one of the poorest regions of Spain. The group, backed by cheap euro loans bought acres of agricultural land to build self-contained, gated holiday resorts each constructed around a golf course.
Promoted
with a memorable TV campaign fronted by Jack Nicklaus and a very slick
sales operation, Polaris convinced thousands of buyers – many from the
UK – to pay top prices for property in the desert.
Many put down
large deposits on more than one property hoping to cash in on rising
values. At the peak of the market some made a profit, but as the financial crisis
began to unfold in 2008, prices began to fall. The company kept
building despite the slump in the prices of its existing developments.
By 2010, Polaris World was forced to relinquish most of its assets – the
golf courses and unsold properties – to a consortium of banks led by
CAM Bank (Caja de Ahorros del Mediterraneo), the leading lender behind
the Murcia building spree.
In December last year, CAM was sold to
Banco Sabadell for just €1 – after Spain's deposit guarantee fund
injected €5.25bn into the stricken lender.
Many British buyers who
bought early and off-plan pulled out before completion. Delays in
construction, a decline in the value of the pound, and falling prices
didn't help. Those who did go ahead were often financed by Spanish banks
with mortgages on generous terms – in some cases up to 115% of the
property value.
Today the bank-owned apartments that were selling
for €200,000 at the market's height, are being offered "as new" for
€68,000 by the banks desperate to get them off their balance sheets.
Private sellers asking €50,000 struggle to find a buyer. Many owners who
want to bail out can't as their mortgages exceed the value of the
property. They can't even get decent rental income as everyone is
chasing the same renters, and rents have slumped. Those who handed the
keys back and walked away have been are being pursued by debt
collectors once back in the UK.
Despite everything that has happened the established Polaris World sites have fared better than some of the recent arrivals.
At
the massive La Torre resort this week, the golf courses were looking
well-tended, – but no one was on them. The bars and restaurants except
one, were closed, communal pools lie unused and a five star
Intercontinental Hotel is bereft of visitors. For sale signs abound.
On
the nearby Hacienda Riquelme (another Polaris World) resort, a 30
minute drive from the coast, a British couple were among the few
visitors. Of the 1,700 units, it's understood that only 150 are
occupied.
Next door is the "exclusive, bespoke resort" of Peraleja
Golf, built by a Spanish family firm around a Seve Ballesteros-designed
course. Outside their home we met Jim and Jackie McVicar, from Kent.
The retired couple spend nine months a year at their impressive villa
for which they paid €650,000. They moved there after managing to get out
of a Polaris World apartment "intact".
Their villa was completed
to a high standard, but the developer has run out of money, and the vast
majority of unsold houses lie as ugly concrete shells. By the entrance
to the community, which along with every other 'urbanization' has a full
security desk, lies an empty building that was planned as a convention
centre.
"We've suggested that they put in some windows and basic
fittings into the empty homes to make them saleable but I guess they've
run out of money. If we tried to sell we'd be lucky to get €450,000 –
it's not a problem for us as we really like it here but for those with
big mortgages … it's very difficult," said Jim.
He revealed a
neighbour had paid more than €1m for a similar villa that would now be
worth a fraction of that – assuming they could find a buyer.
The
newest of the Polaris World resorts, El Valle, is perhaps the most
surreal. The development, the furthest from the coast, comprises several
hundred homes, but on the day of our visit, there were just four people
on site – three of whom were staff. Everything is complete, and in good
condition. And almost totally devoid of life.
At the Mosa
Trajectum resort next door, one almost expects to see tumbleweed blowing
down the main street. Here the golf course looked dry and less
well-tended. The houses that had been started looked finished, but
immaculate roads just stop as if someone had decided mid-project that
enough was enough. The sales office, typically a vital feature of such
developments was long abandoned..I called in At Polaris World's
glass-clad HQ for an explanation of what had gone wrong, when I revealed
I was reporting for The Guardian. The spokeswoman said: "There's
nothing I can tell you. I don't know anything." the spokeswoman said.
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