Xavier Sala i Martin, professor of Economy at the University of Columbia, estimates that 10% of Spanish GNP, will be the ´big hole´ that Banks of this country will have to absorb, due to the arriving ´storm´ of unpaid loans.
Indeed, Spain has been depended of the building activity for as much as 19% of its GNP, whereas other countries such as Germany showed a dependency of this sector of only 4%.
Xavier Sala i Martin also stressed that Builders and Real Estate Companies, have a debt with Banks of € 300.000 Million, or 27% of Spanish GNP.
If we add to this situation, the fact that 1 million unemployed people as a result of the construction crisis, will soon loose their unemployment benefits and will therefore, not be in a position to repay their loans, the picture will become even worse.
In 2008 the Property Purchase and Sale activity decreased in Spain with more than 28% and this descent will continue during 2009.
All in all property prices will continue to fall and it is now the right time to buy a second residence under the sun.
Banks and distressed sellers will have no other choice than to lower down the asking prices to get rid of a stock of more than 1 million unsold properties in Spain.
The Spanish Coastal Areas have suffered the strongest decrease in property prices in 2008, registering price reductions of up to 25% in market value, in locations such as Denia, Benidorm and Torrevieja in Alicante or Estepona and Benalmádena in Málaga province.
Although construction activity increased slightly with over 1% during the month of January in 2009 (after the debacle during the year 2008, which saw the activity getting a hit of 41,5% less properties built), it is most likely that the sector will not start recovering until 2012 or beyond.
At Olivar Estates, we are now in a position to offer property in Marbella at prices up to 40% under their current market value and this in luxury developments on key locations.
We believe, that 2009, is the right year to invest in quality and location in Marbella.