Claims that property prices in Spain's Costa Colida will soar when a €1bn Paramount theme park opens in four years are wide of the mark. Anyone who believes the Murcia property market is ripe for growth does not fully understand just how bad market conditions are.
Some local estate agents and developers claim that the new theme park, which is scheduled to open in 2015, and new international airport – expected to open later this year – will help drive demand for property in Murcia.
Although this may be true, the existing oversupply of homes is so severe that it will take many years to absorb the existing glut of unsold properties in Murcia.
Spain’s economic troubles and an irresponsible 10-year construction boom, which started around 1997, has led to a severe oversupply of residential properties in Murcia and a high rate of repossessions. There are literally rows of unsold properties and prices are still falling.
Rhona Hutchinson of Integrated Relocation Spain reports that there is still a lot of distressed housing stock to be released by the banks, but they are holding back from flooding the market further, in order to allow the existing oversupply of properties to be absorbed. Consequently, the construction of new homes has come to a virtual halt.
However, Polaris World, the largest holiday property developer in Murcia, has, somewhat surprisingly, announced fresh plans to build over 400 new homes this year at its Las Terrazas de La Torre golf-led development in anticipation of a market recovery.
Despite poor sales to date, the company’s decision to start building homes again at Las Terrazas is inspired by the construction of a new international airport nearby, which is scheduled to open in September, along with the plans to build a major Paramount theme park in the region.
While acknowledging that that the new airport and proposed construction of Paramount is certainly good news, Mark Stucklin, head of Spanishpropertyinsight.com, a property information website, said that the developer should refrain from adding to the existing supply of homes “in anticipation of higher demand”.
“[As a prospective purchaser] I wouldn't take the risk of buying during the off-plan stage of construction whilst there are so many newly-built properties to choose from,” said Stucklin.
In recent weeks, another Murcia-based property developer has announced plans to construct 500 new homes at a new development, called Lake Argos, in a nature reserve setting in the municipal district of Cehegin in the northeast of the Murcia region, on the back of the proposed Paramount theme park.
Chris Mercer, director of Director of real estate agent Mercers in Mazarron, fears that the decision to launch Lake Argos and more homes at Las Terrazas de La Torre “may be just a little premature”.
“We genuinely have little demand for off-plan property and in fact haven’t sold one in around two years,” said Mercer.