Wednesday August 13, 05:30 AM
Spanish holiday village becomes symbol of property crisis
By Virginie Grognou
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OROPESA DEL MAR, Spain (AFP) - It was the promise of a dream come true for many Spaniards: an affordable and comfortable home by the Mediterranean with year-round sunshine.
And the Marina d'Or group raked in profits on the back of it, that is until the bubble burst on Spain's property market.
The company built more than 10,000 apartments and five massive hotels, each with a swimming pool, at the eastern town of Oropesa del Mar during Spain's economic boom years, which began in the mid 1990's.
Now a symbol of the country's "golden age" of construction, the Marina d'Or holiday village tempted Spain's newly affluent middle classes.
But many are now unable to sell their properties after rising interest rates and the international lending crunch began to bite into Spain's credit-fueled expansion last year.
The impact of rising eurozone rates has been especially strong in Spain because the vast majority of mortgages have a variable interest rate.
Marina d'Or has been hit hard by the abrupt economic downturn, as have other major property developers such as Martinsa-Fadesa (Madrid: FAD.MC - news) , which filed for bankruptcy protection last month.
Marina d'Or's net profits plummeted by 50 percent in 2007 and sales of apartments plunged 60 percent.
Around 1,000 employees have been laid off, mostly immigrants working in construction.
And its television ads, criticised as irritating, that were broadcast for years have finally ceased.
"It's more difficult to sell apartments now," Marina d'Or president Jesus Ger told AFP in a text interview.
The 62-year-old former mattress salesman who made a fortune on the property boom blamed the slump on "difficulties encountered by families seeking mortgages".
One resident, Enrique, 76, said owners "who bought as an investment are trying desperately to offload them."
"But they are caught in a trap, as the price of their flats has plunged and they can't sell," said the retiree, who spends about half the year at his Marina d'Or apartment.
Over the past year, the average price of a flat at Marina d'Or has dropped from around 300,000 to 200,000 euros (300,000 to 450,000 dollars), the Gaceta business newspaper said recently.
Francisco, 35, who is renting a flat for 900 euros a week, said he was disappointed in the complex: "I was expecting it would be better maintained."
He noted that even here, by the sea, he is confronted with Spain's economic crisis, with "massive 'For Sale' signs in the windows, and restaurants that are half empty," even at the height of the tourist season.
However, another resident, Victoria, a retiree from Madrid was full of praise for the village, where "the service is impeccable and there are no security concerns due to surveillance cameras."
Ger said his group is now investing overseas, in particular in Morocco, Egypt, Bulgaria, Brazil, the Dominican Republic and Panama.
"We are more careful about future projects," he said.
But he is also currently awaiting the approval of regional authorities to build "the biggest holiday village in Europe", called Marina d'Or Golf, near the present Marina d'Or complex.
The project, which comprises seven luxury hotels and three golf courses, has already come under fire from environmentalists.
Greenpeace predicted it would be another of the "black spots" that are disfiguring Spain's Mediterranean coast and noted that the golf courses will be built in one of the driest regions of the country.
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