The Hero
الأســــــــــــــطورة
- إنضم
- Jun 29, 2008
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Spain's ghost towns: Built during the boom years but now lying empty... as jobless total tops FIVE MILLION
Spain has highest jobless rate in Europe with 22.9% unemployed
Sesena, dubbed Manhattan of Madrid, supposed to have 30,000 residents
But only 5,100 of 13,000 homes built... and prices now HALF original value
Spain is steadily becoming a nation
of 'ghost towns' - with empty apartment blocks, streets and weed-filled
gardens where bustling communities were supposed to move.
Entire
housing estates built during the country's boom years have been left
abandoned, bricked up and now on sale for almost half their original
price.
One such settlement
is Sesena, dubbed the Manhattan of Madrid for its towering apartments
and proximity to the capital, where 30,000 people were due to live.
Loneliness of the long-distance ruuner: A jogger
in the shadows runs past empty apartment blocks in Sesena, a 45-minute
drive south of Madrid, where 30,000 people were due to live
Of
the 13,000 homes due to be built, only 5,100 were completed - most of
them now uninhabited and the Spaniards who bought them as investments
now competing to offload them for huge losses.
Spain's
housing market crash and economic implosion have turned what was
supposed to become a vibrant suburban paradise for young Spanish couples
and their children into one of the most visible monuments of the
country's boom gone bust.
Such modern-day ghost towns have become a familiar part of the Spanish landscape, abandoned shells left to slowly decay.
The number of foreclosure proceedings skyrocketed during the economic crisis.
Barren plains: Landscaped areas, which were due to be built on, lie
vacant on the outskirts of ghost town Sesena as the Spanish housing
crisis continues to take its hold
Nearly 530,000 were granted by
courts from 2008 through September of 2011, most to banks taking homes,
housing developments and vast tracts of land for residential and
commercial real estate projects that may never become reality.
The
banks were ordered this month by the recently elected centre-right
government to set aside billions of additional euros to cover these
toxic real estate assets valued at 175billion euro just as Spain teeters
on the edge of what could be a lengthy recession.
[h=3]MORE THAN 5 MILLION SPANIARDS NOW OUT OF WORK[/h]Spain
now has more than 5million people (22.9 per cent of its residents) out
of work - and recent growth data suggests the situation is only going to
get worse.
The country's economy shrank, by 0.3 per cent, for the first time in two years in the fourth quarter of 2011.
Economists
believe it is the start of what could be a prolonged slump as Madrid
implements harsh austerity measures to deflate a massive budget
deficit.
The country already has the highest unemployment figure in Europe.
RBS economist Nick Matthews said: 'Some countries in the eurozone may just avoid a recession, but that may be more difficult for Spain.
'Given
the need for fiscal consolidation in the country and the pressure that
puts on domestic demand, its going to be very difficult for Spain to
avoid recession.'
Economic
output in the 17-nation single currency area fell 0.3 per cent in the
fourth quarter from the third, official data showed yesterday as the
sovereign debt crisis crushed a recovery and looked set to push the bloc
in to a mild recession.
The Italian economy joined Belgium, Greece and Portugal in formal recession having already shrunk in the third quarter of 2011.
Purchasing
data from Markit for January showed a slight improvement for the
Spanish manufacturing and services industries, but it may not be enough
for an economy that has been in recession or close to stagnation for
almost five years.
Spain
had been growing at an above-average rate since the country entered
into the eurozone monetary union 12 years ago, but the boom was largely
due to the housing expansion fuelled by cheap loans and has been
struggling since the 2007 crash.
Experts say the government's new
provisions for real estate holdings will almost certainly prompt the
banks to sell holdings at firesale prices, forcing property values down
much more than the 22 per cent that they have dropped since the
financial crisis hit Europe in 2008.
In
Sesena and other ghost developments around Spain, some banks are
already trying to unload finished apartments at discounts of up to 50
per cent of their original prices.
But
that is hurting untold numbers of Spaniards who invested savings and
took out big loans to buy property they thought they would be able to
sell for more money or rent.
Satellite cities that never ended up with populations are not Spain's only problem.
Around
Madrid and across the country, there are vast subdivisions carved out
of farmland complete with paved roads and streetlights but only weeds
where houses were supposed to be built.
Half-built apartment buildings stand idle in suburbs rich and poor.
With
unemployment at a eurozone high of 23 per cent, there are simply fewer
buyers - and young Spaniards are increasingly trying to find work
abroad.
In December alone, sales were down 25.3 per cent compared to the same month in 2010, the government reported last Friday.
'This
is the problem: Who is going to buy these homes?' said Jose Luis
Alvarez Arce, head of the economics department at the University of
Navara.
It could take years
for the banks to clean up their assets and relieve a growing credit
crunch affecting individuals and businesses, some of whom never got
caught up in the Spanish real estate craze in which most citizens bought
real estate as an alternative to savings accounts, investment funds and
retirement plans.
The boom
and bust has been so profound that the impact is changing the Spanish
mentality about real estate, said Fernando Encinar, head of research at
Spain's most popular real estate website, Idealista.com.
Younger
Spaniards, he said, for the first time do not believe parents who have
told them for decades that they should always buy instead of rent and
treat real estate as an investment that will never go bad. The age-old
saying in Spain that prices never go down or not for long 'is now
broken', Encinar said.
No neighbours: One resident of Sesena bought a
three-bedroom apartment with a terrace for 185,000 euro but is now stuck
in a city that has no public transport or even a pharmacy
'We're starting to see
people who must sell with losses they would have never accepted in the
past,' Encinar said. 'And some of these homes are never going to be
sold.'
Spain's development ministry estimates there are 687,000 unsold new homes for sale.
Other
studies put the number as high as 1.6million in the nation of
47million, where 80 per cent of the population already lives in owned
homes, a rate much higher than nations like France, Germany, Italy and
the United States.
There
is no government figure for used homes for sale, but estimates range
into the millions. The value that the banks put on the property just
isn't real,' Alvarez said.
'And
as a result the banks don't trust each other, they aren't lending to
each other and if they don't lend to each other there's no credit for
Spaniards.'
Juan Carlos
Caballero bought his three-bedroom Sesena apartment with a terrace
overlooking the residents' pool in 2008 for 185,000 euro after his
retired father jumped into the real estate action to buy the same style
of apartment at a lower pre-construction price.
Landlord's nightmare: A chauffeur who bought a
property in Sesena has dropped his rental value by a third but said
finding anybody to move in 'like winning the lottery'
Father and son were both
convinced housing prices would continue to rise as they had since the
mid-1990s. They now are stuck with homes in a development that does not
have a pharmacy or good public transport to Madrid.
The
only pizza restaurant is open just three nights a week and on Saturday
afternoon when there are enough clients to justify operating, and the
roast chicken takeaway only opens Friday nights and Saturday afternoons.
Apartment
blocks have ground floor commercial space for small businesses so
people can walk to buy whatever they need. But most units are sealed by
brick walls scrawled with cell phone numbers of owners offering to sell
or rent them.
Tough decisions: Spanish Prime Minister Mariano
Rajoy is having to implement massive budget cuts to save the country
from bankruptcy
The 33-year-old Caballero, an
unemployed chauffeur, last rented his apartment for 750 euro a month two
years ago, and is now asking just 500 euro per month. Similar
apartments are being offered at 375 euro monthly, but he is asking for
more because his is in immaculate condition with new furniture and
appliances.
His father,
Jesus, is offering his apartment for sale at 108,000 euro, meaning he
stands to lose tens of thousands of euros in a bid for retirement cash
now that he's reached age 67.
But banks selling foreclosed property in Sesena have smaller apartments listed as low as 65,000 euro.
'Selling
or renting now is like winning the lottery,' said the younger
Caballero, who lives with his parents and shells out 500 euro of his
700 euro monthly unemployment cheque to pay his mortgage and other
apartment costs.
In the
town of Yebes more than an hour's drive from Madrid, 9,000 apartments
and small houses were supposed to be built in a bucolic country setting
next to a high-speed train station so workers could get downtown in less
than 20 minutes.
But only
1,500 were finished before developers went broke, 3,000 people live
there instead of the projected 30,000 and government officials never
launched the train service.
'The station is built, the trains are bought but they never started running,' said Mayor Joaquin Ormazabal.
The
240,000 euro home he bought would now sell for about half the price.
The population in Yebes is increasing somewhat as banks sell off
foreclosed properties at low prices, but Ormazabal said it could be
decades if ever before the rest of the land is developed.
'Nothing's
going to happen until the Spanish economy comes back,' he said. 'Right
now no one is thinking about building anything in Spain.'
Carlos
Velazquez, Sesena's mayor, said the development fiasco has one positive
side: Spanish real estate speculators aren't snapping up apartments any
more in his town.
Those
that are buying 'are people who are going to come here to live, pay
their taxes and want the place to be nice for their children.'
Spain has highest jobless rate in Europe with 22.9% unemployed
Sesena, dubbed Manhattan of Madrid, supposed to have 30,000 residents
But only 5,100 of 13,000 homes built... and prices now HALF original value
Spain is steadily becoming a nation
of 'ghost towns' - with empty apartment blocks, streets and weed-filled
gardens where bustling communities were supposed to move.
Entire
housing estates built during the country's boom years have been left
abandoned, bricked up and now on sale for almost half their original
price.
One such settlement
is Sesena, dubbed the Manhattan of Madrid for its towering apartments
and proximity to the capital, where 30,000 people were due to live.
Loneliness of the long-distance ruuner: A jogger
in the shadows runs past empty apartment blocks in Sesena, a 45-minute
drive south of Madrid, where 30,000 people were due to live
Of
the 13,000 homes due to be built, only 5,100 were completed - most of
them now uninhabited and the Spaniards who bought them as investments
now competing to offload them for huge losses.
Spain's
housing market crash and economic implosion have turned what was
supposed to become a vibrant suburban paradise for young Spanish couples
and their children into one of the most visible monuments of the
country's boom gone bust.
Such modern-day ghost towns have become a familiar part of the Spanish landscape, abandoned shells left to slowly decay.
The number of foreclosure proceedings skyrocketed during the economic crisis.
Barren plains: Landscaped areas, which were due to be built on, lie
vacant on the outskirts of ghost town Sesena as the Spanish housing
crisis continues to take its hold
Nearly 530,000 were granted by
courts from 2008 through September of 2011, most to banks taking homes,
housing developments and vast tracts of land for residential and
commercial real estate projects that may never become reality.
The
banks were ordered this month by the recently elected centre-right
government to set aside billions of additional euros to cover these
toxic real estate assets valued at 175billion euro just as Spain teeters
on the edge of what could be a lengthy recession.
[h=3]MORE THAN 5 MILLION SPANIARDS NOW OUT OF WORK[/h]Spain
now has more than 5million people (22.9 per cent of its residents) out
of work - and recent growth data suggests the situation is only going to
get worse.
The country's economy shrank, by 0.3 per cent, for the first time in two years in the fourth quarter of 2011.
Economists
believe it is the start of what could be a prolonged slump as Madrid
implements harsh austerity measures to deflate a massive budget
deficit.
The country already has the highest unemployment figure in Europe.
RBS economist Nick Matthews said: 'Some countries in the eurozone may just avoid a recession, but that may be more difficult for Spain.
'Given
the need for fiscal consolidation in the country and the pressure that
puts on domestic demand, its going to be very difficult for Spain to
avoid recession.'
Economic
output in the 17-nation single currency area fell 0.3 per cent in the
fourth quarter from the third, official data showed yesterday as the
sovereign debt crisis crushed a recovery and looked set to push the bloc
in to a mild recession.
The Italian economy joined Belgium, Greece and Portugal in formal recession having already shrunk in the third quarter of 2011.
Purchasing
data from Markit for January showed a slight improvement for the
Spanish manufacturing and services industries, but it may not be enough
for an economy that has been in recession or close to stagnation for
almost five years.
Spain
had been growing at an above-average rate since the country entered
into the eurozone monetary union 12 years ago, but the boom was largely
due to the housing expansion fuelled by cheap loans and has been
struggling since the 2007 crash.
Experts say the government's new
provisions for real estate holdings will almost certainly prompt the
banks to sell holdings at firesale prices, forcing property values down
much more than the 22 per cent that they have dropped since the
financial crisis hit Europe in 2008.
In
Sesena and other ghost developments around Spain, some banks are
already trying to unload finished apartments at discounts of up to 50
per cent of their original prices.
But
that is hurting untold numbers of Spaniards who invested savings and
took out big loans to buy property they thought they would be able to
sell for more money or rent.
Satellite cities that never ended up with populations are not Spain's only problem.
Around
Madrid and across the country, there are vast subdivisions carved out
of farmland complete with paved roads and streetlights but only weeds
where houses were supposed to be built.
Half-built apartment buildings stand idle in suburbs rich and poor.
With
unemployment at a eurozone high of 23 per cent, there are simply fewer
buyers - and young Spaniards are increasingly trying to find work
abroad.
In December alone, sales were down 25.3 per cent compared to the same month in 2010, the government reported last Friday.
'This
is the problem: Who is going to buy these homes?' said Jose Luis
Alvarez Arce, head of the economics department at the University of
Navara.
It could take years
for the banks to clean up their assets and relieve a growing credit
crunch affecting individuals and businesses, some of whom never got
caught up in the Spanish real estate craze in which most citizens bought
real estate as an alternative to savings accounts, investment funds and
retirement plans.
The boom
and bust has been so profound that the impact is changing the Spanish
mentality about real estate, said Fernando Encinar, head of research at
Spain's most popular real estate website, Idealista.com.
Younger
Spaniards, he said, for the first time do not believe parents who have
told them for decades that they should always buy instead of rent and
treat real estate as an investment that will never go bad. The age-old
saying in Spain that prices never go down or not for long 'is now
broken', Encinar said.
No neighbours: One resident of Sesena bought a
three-bedroom apartment with a terrace for 185,000 euro but is now stuck
in a city that has no public transport or even a pharmacy
'We're starting to see
people who must sell with losses they would have never accepted in the
past,' Encinar said. 'And some of these homes are never going to be
sold.'
Spain's development ministry estimates there are 687,000 unsold new homes for sale.
Other
studies put the number as high as 1.6million in the nation of
47million, where 80 per cent of the population already lives in owned
homes, a rate much higher than nations like France, Germany, Italy and
the United States.
There
is no government figure for used homes for sale, but estimates range
into the millions. The value that the banks put on the property just
isn't real,' Alvarez said.
'And
as a result the banks don't trust each other, they aren't lending to
each other and if they don't lend to each other there's no credit for
Spaniards.'
Juan Carlos
Caballero bought his three-bedroom Sesena apartment with a terrace
overlooking the residents' pool in 2008 for 185,000 euro after his
retired father jumped into the real estate action to buy the same style
of apartment at a lower pre-construction price.
Landlord's nightmare: A chauffeur who bought a
property in Sesena has dropped his rental value by a third but said
finding anybody to move in 'like winning the lottery'
Father and son were both
convinced housing prices would continue to rise as they had since the
mid-1990s. They now are stuck with homes in a development that does not
have a pharmacy or good public transport to Madrid.
The
only pizza restaurant is open just three nights a week and on Saturday
afternoon when there are enough clients to justify operating, and the
roast chicken takeaway only opens Friday nights and Saturday afternoons.
Apartment
blocks have ground floor commercial space for small businesses so
people can walk to buy whatever they need. But most units are sealed by
brick walls scrawled with cell phone numbers of owners offering to sell
or rent them.
Tough decisions: Spanish Prime Minister Mariano
Rajoy is having to implement massive budget cuts to save the country
from bankruptcy
The 33-year-old Caballero, an
unemployed chauffeur, last rented his apartment for 750 euro a month two
years ago, and is now asking just 500 euro per month. Similar
apartments are being offered at 375 euro monthly, but he is asking for
more because his is in immaculate condition with new furniture and
appliances.
His father,
Jesus, is offering his apartment for sale at 108,000 euro, meaning he
stands to lose tens of thousands of euros in a bid for retirement cash
now that he's reached age 67.
But banks selling foreclosed property in Sesena have smaller apartments listed as low as 65,000 euro.
'Selling
or renting now is like winning the lottery,' said the younger
Caballero, who lives with his parents and shells out 500 euro of his
700 euro monthly unemployment cheque to pay his mortgage and other
apartment costs.
In the
town of Yebes more than an hour's drive from Madrid, 9,000 apartments
and small houses were supposed to be built in a bucolic country setting
next to a high-speed train station so workers could get downtown in less
than 20 minutes.
But only
1,500 were finished before developers went broke, 3,000 people live
there instead of the projected 30,000 and government officials never
launched the train service.
'The station is built, the trains are bought but they never started running,' said Mayor Joaquin Ormazabal.
The
240,000 euro home he bought would now sell for about half the price.
The population in Yebes is increasing somewhat as banks sell off
foreclosed properties at low prices, but Ormazabal said it could be
decades if ever before the rest of the land is developed.
'Nothing's
going to happen until the Spanish economy comes back,' he said. 'Right
now no one is thinking about building anything in Spain.'
Carlos
Velazquez, Sesena's mayor, said the development fiasco has one positive
side: Spanish real estate speculators aren't snapping up apartments any
more in his town.
Those
that are buying 'are people who are going to come here to live, pay
their taxes and want the place to be nice for their children.'