Real estate shutdown mooted

A possible shutdown of construction activity due to ‘explosive rise in prices of raw materials’ has been mooted by the association of real estate promoters for Alicante province (Provía).

The idea was discussed by their board of directors last week, and they warned that the situation is ‘jeopardising the viability of current projects and stopping new residential initiatives’. Moreover, they claimed the price rises for some raw materials are unjustified, having ‘detected speculative stockpiling and withholding of materials by some suppliers’. Companies are already taking measures to try and combat soaring costs, for example some promoters have decided not to start new projects.

Many new construction projects approved between October and February have not been started, and if costs do not return to normal there will be a steep increase in the prices of new real estate, they stated. Companies that already have works underway will be forced to increase the prices of homes that are not yet sold by as much as 10% or more. Others have slowed down the pace of work in the hope that the cost of raw materials will gradually drop, and some have temporarily suspended work, which will mean a delay in being able to hand homes over to buyers. Provía warned that a stoppage in the sector would have a big economic impact. If the situation does not change, they estimate 1,525 homes will not be started, which would mean the province loses €326 million in investment. This would have a direct impact on 3,700 jobs and reduce income from taxes and social security contributions by €142m, they claimed. Any stoppage would be ‘preventative’, they assure, ‘in response to justified and unjustified price rises that are making projects unviable’. The promoters will keep analysing the progression of market prices in order to make a definitive decision based on whether the situation persists and their costs keep rising.