Earnings reports reveal crisis in property sector

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Net losses for last quarter of 2007 at EUR 190 million as slowdown takes hold

4 March 2008

MADRID - A slowdown in the Spanish real estate sector during the course of 2007 turned into a full-blown crisis in the last three months of the year, according to the annual earnings reports of Spain's leading property developers and home sellers.

Out of seven real estate groups studied, all, except Martinsa-Fadesa and the tiny Parquesol, reported falls in revenue during the last quarter of 2007 as the flow of buyers in Spain's once buoyant property market dried up. Total net losses in the three-month period amounted to EUR 190 million, although much of that amount was due to the dire performance of Astroc, now part of Afirma Grupo Inmobiliario along with Landscape Promociones and Rayet.

But even diversified giants such as Sacyr-Vallehermoso were not immune to the sharp downturn in the residential segment of the market. The group's earnings report shows a 21-percent fall in the value of home sales last year to EUR 1.3 billion due, in the words of Chairman Luis del Rivero, to the "slowdown in the market,"

Analysts predict that the real estate industry will fare no better in 2008, with a group of savings banks arguing that the end of the property boom is proving "more traumatic" than expected.

[Copyright EL PAÍS / LUIS DONCEL 2008]

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