Drone videos of the burst property bubble in Spain

Spanish photographer’s prizewinning images of Spain’s burst housing bubble

 

Basque photographer Markel Redondo traveled across Spain in 2010 to capture the abandoned housing developments left behind after the country’s property bubble burst. Between 2000 and 2008, around five million homes were built in Spain, many of them along the country’s extensive Mediterranean coastline, while others were part of vast residential estates constructed on greenfield sites, often in rural or protected areas. But the housing market collapsed, leaving hundreds of thousands of new and unfinished properties unsold throughout the country.

Verne. Following his plan to repeat the project in a distant future, Redondo returned to the sites this year. But this time, for his second series Sand Castles II, Redondo used a drone.​

 

I'm currently travelling in China and I reckon that I have seen 10's of thousands of empty and unfinished apartments and still blocks are going up everywhere.

I can't help thinking its all going to end in tears for some developers.

 

So why aren't these empty estates being settled by refugees?

 

I would guess because there is no water, electricity, sewage...and the buildings are just shells.

 

In China now too and I'm seeing high rises all over the place but the markets I'm looking at are absolutely booming. All depends on location. High demand locations are extremely sought after here. Money is rarely an issue . So many ppl have money .

 

This is basically it. I know a lot of the estates in outer Dublin fit into this category. The projects were often tower blocks or homes where builders had bought up multiple blocks and it just wasn't viable to keep finishing places no one wanted to or could buy. When you're a builder you need to be earning money, and everything just stalled. No one bought them because they were partly finished and so couldn't be lived in, and no one had the incentive to finish either.

There was a pretty good government response in terms of dealing with the estates, in my opinion. The response is actually still ongoing. e.g. this is a recent progress report (a decade on!) https://www.housing.gov.ie/sites/de...elopments_-_2017_annual_progress_report_0.pdf and there's been a 90% reduction in ghost estates.

There was a massive glut to get through with over 3000 stalled development projects including entire estates, blocks, etc (on top of a lot more individual assets people couldn't sell). It really snuck up on everyone too. The trouble was demand for investments dropped like a rock very quickly, so the rate of construction one year was barely meeting demand, then suddenly there were tens of thousands of empty or half-built places and no one wanted them, because investors had been half the market, and without them demand had halved within 6 months. Also a lot of builders who'd planned projects (buying land years in advance in new releases) but couldn't get demand because people who were looking to buy could now get nicer places in established areas.

A lot were bulldozed (hundreds) because there was more value in reselling or repurposing the land. The trouble is, stalled builds can become derelict pretty quickly. The public response was also a big push to get rid of them e.g. a lot of them were vandalised, a little boy drowned in an abandoned pool, a lot of crime (as these were often low socio-economic fringe areas).

Those estates that were very close to finishing were actually in many cases bought up by the Dept of Housing and used for social housing, which was great. Big reduction in the number of homeless people and those waiting for public housing. I'm not sure Spain's response was as organised?

Take away message: please, please avoid fringe estates and new developments like the plague in a slowly market ladies and gentlemen, as these made up most of the crash. Some new suburban estates had mostly part-built places, often owned by investors or builders who now wanted to sell, so even those who'd bought to live there wanted the hell out, because who wants to live in a half-built suburb? Infrastructure also dried up in the recession so people stuck in these areas just all wanted out at once, and those who owned in them or wanted to rent often had low incomes, so were more vulnerable to mortgage shock. Established homes in good areas, by contrast, remained in pretty high demand. A fringe asset would lose 95% of its value, while a nice inner-Dublin house would lose maybe 15% (a hit to the ego at worst) and then recovered. Cashflow was also great for these inner-city places because the proportion of renters skyrocketed (when banks won't lend and when buyers don't want to catch a falling knife, what do they want to rent? A friend of mine stayed afloat just on rental increases alone).

Note this is also why even the worst case scenario crash is not going to "end the economy" or bring on doomsday, or even upset everyone's apple cart. If prices drop they are going to rise, because when prices drop, demand swings back on up.

 

Nicely explained!! However do you think the sydney market may also crash like that one day?
Areas near where government had a big push by getting sydney metro etc they should be able to keep afloat in bad times.

 

Stunning. I remember when Top Gear filmed an episode there a few years ago... I think S20E03

Top Gear Trio Visit to a Spanish Ghost Town Highlights the Spanish Recession - The European Magazine

 

I'm starting to think it already is, though of course I don't think anyone can be sure of that. You can't really be sure a bubble is bursting (e.g. in Ireland there was a period of maybe 2 years where the market was very iffy, and you couldn't be very sure of the direction). Taken from the most recent peak, Sydney is almost 5% down and will be 5% down by mid-year if prices just stall from here (lower still if prices keep dropping). Will that continue? I don't know. But I do think it's wise to be prepared, and to think carefully about two things:

1. your current assets. What is your competition? If you are relying on capital growth, or if you are holding oversupplied city fringe assets or small apartments, you are in a much riskier position. If the market does crash, most of the pain will be in those markets.

2. prepare yourself to take advantage of the inevitable opportunities that come with downturns. What goes down will come up.

 

What happened to apartments?

 

Same thing really. Here's an example of one that started off as apartments/offices, never got finished, sat around for years and is not becoming office blocks. An enduring symbol of Ireland's property crash is about to get a huge overhaul

 

that’s just like the big unfinished apartment complex in Footscray. It’s been sitting there for over a year now.

 

Building halted last year.

There’s 2 others although not as big

 

Is that the Footscray one?

 

Yeah

 

USA - Las Vegas
The Drew Las Vegas - Wikipedia and
Resorts World Las Vegas : Here's What's Really Happening at Resorts World

These are massive sites.

 

Nice episode. . That's when I first saw or heard about the property crash in Europe.. China is definitely on the way to a similar big collapse, just a matter of time.

 

It's good to see you are prepared and have your hard hat on.

 

Don't be so sure .

I've bought investments in China ( just bought more this trip) that have gone up 10x, that's right, 10x in 6 years and many markets are still doing well in high demand areas. That's the key. Alot of ppl here are so cashed up, its not funny . Massive amounts of money floating around . 1. Chinese save very well from a young age , 2. Alot of wealthy business ppl buying 3, Alot of corrupt money invested regularly .4, Families pool money together to buy 5. Basically if men dont own a home its gonna be hard to get a wife. Added bonus to buy. 6. Government has real unilateral power here to stop/limit/minimise any major widespread crash. 7. Demand for stock in high demand areas is so massive . Supply is limited in these areas. Need to remember I'm only talking about high demand locations .