Land Grab Costs Valencia €1Bn
March 16th, 2007
Foreign real estate investment in the Valencian region has fallen by a thousand million euros since high profile protests about ‘land grab’ laws began in the region, according to a recent study by the Bank of Spain.
Brenda Waddington of Spanish agent Rusticasa told the OPP that: “There has been an extremely noticeable drop in sales of rural properties over the last two or three years as people have been scared off by the stories of land grab, and many of those who were still prepared to go ahead bought in places like Catral and Albox where the rural houses were illegal and this has brought yet more horror stories. All totally avoidable as there are no risks associated with buying a property with full and correct planning permission which complies with current legislation. Having said that, rural properties were only a small percentage of the overall amount.”
Visits from EU representatives, in response to petitions from British expats, have had a damaging effect on perceptions of the area according to recent press releases from the Valencian government. The Valencian Minister for Territory and Housing, Sr. Esteban, Gonzalez Pons, said a recent visit was not only ‘whirlwind and touristic’ but the deputation appeared to focus on accusations relating to the old LRAU and not the updated LUV “which corrects the excesses and errors of the LRAU and implies a model of urbanism which is of quality and sustainable,” he said.
“Although the visits are giving a bad image altogether of the area, I do not think they are the main reason for the large drop in investment from overseas,” says Waddington. “I believe the main reason for the drop in investment in properties in Spain is the extremely large increase in the level of prices.
“Although the Valencian Government has been criticised for allowing so much development one has to remember that tourism, both residential and holiday, as well as the building of these properties, is a major source of employment and income for an area seeing its footwear, textile, toy and farming industries badly affected by imports from outside the EU. Quite understandably, they are desperate for it to continue, but there is not the demand for high density housing at high prices to sustain the previous level of sales, although reports suggest that the number of potential buyers is still there.”
Appeals to the European Court of Human Rights by British expats and regular visits from members of the European Parliament have had a major impact on local developers, according to the Valencian Confederation of Builders. The Bank of Spain study also highlighted a trend towards cross-border development by companies such as Hansa, Habitat, Fadesa and Pinar who are now building in France, Bulgaria, Rumania, Poland, Hungary and Portugal.
In a separate report from the Valencian Association of Real Estate Promoters and Builders, its president Salvador Vila said that around 22% of all homes that came on the market last year were sold to foreigners (with 76% bought by Spanish nationals and just under 1% by businesses). Vila claimed that 37,320 homes were sold on average each quarter last year and an average 17,000 mortgages a month were taken out.