16 July 2008

MADRID - The collapse of the Spanish property giant Martinsa-Fadesa was Wednesday causing concern to thousands of families, which had made the company advance payments to acquire homes in several countries, media reported.

The daily El Pais said 12,500 families had begun paying for homes that were still under construction in Spain, Portugal, France, Morocco and eastern Europe.

Martinsa-Fadesa pledged to honour its contracts insofar as the financial conditions allowed for it.

The company, which filed for creditor protection on Tuesday, is the biggest victim so far of the meltdown of Spain's construction sector, which has been hit by rising interest rates and the global credit crunch.

The slowdown of the construction sector is hurting the entire Spanish economy which has also been affected by other factors such as rising oil prices and related inflationary pressures.

Martinsa-Fadesa is preparing to sack 234 people, more than a quarter of its workforce, after running up debts of EUR 5.2 billion euros.

Economy Minister Pedro Solbes said Tuesday that the government had an interest in guaranteeing that the company preserved the maximum amount of jobs and that houses under construction were finished.

[dpa / Expatica]