sábado, 26 de mayo de 2012

Spanish property: Polaris golf resort homes crash to a third of original price

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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