The Spanish property developer Martinsa-Fadesa has become the first victim of the property market crisis in Spain, filing for bankruptcy and protection from its creditors.
Martinsa-Fadesa has filed for bankruptcy and protection from its creditors with debts of around 4 billion euros. The assets of the company are said to be worth around 10.8 billion euros, liquidity problems being the major problem for the property developer.
It is widely thought that other companies in the property sector will go under this year, several being known to be in serious trouble.
The Spanish property market was fuelled by low interest rates when Spain joined the eurozone in 1999, encouraging people to buy first homes or upgrade to a larger property. However, the market began to suffer last year as interest rates and international lending restrictions hit the credit-fuelled Spanish economic expansion.
The property boom, which saw more houses built in Spain in 2006 than in Germany, Britain and France combined, was over. Interest rates are on the up and house prices have fallen in the first two quarters of 2008 and the drop looks set to continue.