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Friday, February 04, 2005

Future of European settlement
on Spanish coasts and islands

Over the last 50 years 1,5 million foreign families have bought a property on the Mediterranean or Atlantic coasts of Spain, or the Balearic and Canary islands; the great majority coming from the countries of the European Union. Why did they come? There were several reasons:
- Over the first 45 years because property in Spain was comparatively cheap, as well as the costs of living. One could stretch a pension. However, today the costs of buying and owning a property and living in the tourist areas of Spain are at least on level with those of Northern Europe. This reason has gone.
- Some bought a property because they considered it a good investment. For many the investment was sound, if they bought in the start of one of the periodical increases in demand, at the right price and at the right place. But many who bought at the top of a boom, have lost money, as well as those that have become victims of schemes of re-zoning. Today it is obvious that prices have reached a roof and that the property market is heading downward. This reason has gone.
- Others again bought because they were promised a good rental income. Some have had a good interest on their money, but only by not paying taxes on their income. Today the control of the letting market is tightening and due to a high offer of dwellings, prices are slowly falling. This reason is out.
- All the foreign buyers came due to an agreeable lifestyle, and a good climate. The agreeable Spanish lifestyle has partly been replaced by a huge number of Spanish and foreign tourists, and their cars, creating chaos in towns and villages and queues/accidents on the roads. The charming villages have to a great degree been destroyed by high-rises and massive property developments. The concrete is replacing the natural beauty of the coasts. The traditional Spanish hospitality and friendliness is disappearing under the impact of commercialism. Spain has built 500.000 dwellings per yezr over the last 5 years, is producing more cement (38 million tons) than Germany (34 million), France (20 million) and UK (12 million tons).
The climate, the sun, is today the only reason for buying a home in Spain.

Is the sun enough?

Is the good climate enough to sustain the level of foreign property purchase that we have had over the last years, with approximately 100.000 dwellings sold per year to foreigners? Certainly not. From the end of 2003 we have seen the sales slipping and during the first half of 2004 it is obvious that the property sale to foreigners is entering a crisis. This is especially felt by private property owners, waiting in vain for a buyer, or having to lower the price. The professional property developers have seen the writing on the wall and have this year reduced to a great degree the number of new dwelling started up.

It is still too early to see how long the crisis will last and how deep it will be. Much depends on the economical situation in the countries of northern Europe, where the increasing oil prices are slowing down the economical growth and nourishing inflation. Many families are afraid that the public pension system will have problems coping with the increasing number of retirees. They place their available funds in pension plans and renounce on the purchase of a vacation home abroad. One must be aware that more than 80% of the foreign home buyers in Spain stay non-residents, using the property for shorter or longer vacation visits, especially over the winter.

Since the sun also shines in southern France, in Italy, Greece, Turkey, Slovenia, Croatia, Florida and other areas, some of them with lower property prices and living costs than Spain, more and more buyers will be looking for new destinations.

The present owners in Spain

There is among the foreign owners in Spain a general feeling of disappointment and dissatisfaction. Some are hard hit by the increased costs of living in the tourist areas, putting up their coastal homes for sale to go further inland in Spain, or leaving this country. Almost all complain about the increased traffic in their area, the lack of parking, the continuous construction activity often destroying the natural beauty of towns, villages and the coast, as well as increasing noise and last, but not least, a dangerous increase in criminality in the tourist areas. They also feel that they are not appreciated by the politicians and the public administration, getting very little in return for extensive and increasing taxes.

Many owners who bought their properties at an earlier stage, fear to become victims of the property development juggernaut, having their homes destroyed and paying the costs of it in addition. The abuses of some “agentes urbanizadoras” under the LRAU-law of the Valencia region is having a profound, negative, effect on foreign home owners in Spain, as well as many potential buyers abroad.

The foreign property buyers and owners are one of the main pillars in the economy in the coastal municipalities
and provinces, creating many jobs and income, directly and indirectly. If we calculate an average total price of 200.000 Euro
per dwelling, the 100.000 dwellings sold per year over the last period represents total yearly income for Spain of 20.000 million Euro. FIPE estimates that the average annual spending (taxes, costs, furniture, car, travel and living) of a foreign family with a property in Spain is 15.000 Euro. Multiplied with 1,5 million properties this gives an annual injection in the Spanish economy of 22.500 million Euro. A total income of 42.500 million Euro per year!

Some of the foreigners have made efforts to learn the Spanish language, integrate in Spanish society and participate in Spanish social life, voting in local and European elections, even becoming member of political parties and candidates to the municipal councils. But the greater part has not taking part in this integration process. Due to the difficulties in learning a foreign language in advanced age, they have sought refuge in the foreigners colonies existing in many places, where they can live, speaking their own language.
This is not a good situation, the foreign owners and residents should be animated more to learn the Spanish language, to participate and integrate. Also the Spanish administration should consider the problems of the foreigners isolating themselves, and foment the integration.

The Juggernaut

The property promoters themselves explain the high prices of dwellings by pointing to that half of the costs are represented by land prices. If we estimate that the price of an apartment with 80 m2 is 200.000 Euro, a normal benefit (including the commissions of the property agents) would be 25%, or 50.000 Euro, it would mean that the land cost would represent 75.000 Euro per dwelling. Often the apartment blocks have 50 apartments on a total plot of 3.000 m2, or 60 m2 per apartment. That means a plot cost of 1.250 Euro per m2.

What did that land cost as farm land, maybe 5 years before it was approved as building land due to a change in the general planning or by the action of an “agente urbanizadora”? Maybe 5 to 10 Euro (830 to 1.660 of the old pesetas) per m2. In our case it would mean 125 to 250 times the original value. (More examples in here!!!!!!!!!!!!!!!!!!!!) It is obvious that such an extraordinary profit over a short period of time will not only attract the persons and companies normally working in the urbanistic field, but also operators and capital from outside the business, in it for the killing. Some of them do not care about the future of the coasts, of tourism to Spain or the promotion or construction business, they would not care for the buyers paying premium prices for products of low quality, for the small landowners that have to be trampled down to clear the field for their promotions. They are in it for a short term, but with enormous profits. In the property boom years from 1985 to 1988 it was calculated that the total value of land in Spain increased from 81,4 billion pesetas to 163,1 billion, not taking into consideration that it was, and still is, a habit to declare officially only a part of the real value in a title deed.


In few cases the town halls are able to harness the Juggernaut. In many cases they have become part of the machine. Often the normal tax income is not sufficient to pay the salaries of the municipal employees, and the town halls have become dependent on the extraordinary income of the urbanistic process to finance their projects. Some municipal leaders have also personally benefited from the approval of urbanistic plans.

The Juggernaut of hard methods, short term investments and extraordinary profits is today changing the Spanish coasts, eating up the few virgin areas and coastal villages remaining, leaving in its wake a sea of concrete, a wall of high rises along the coasts, an enormous amount of row houses and an avalanche of cars.

Example Costa del Sol

The urbanistic Juggernaut has gone wild on Costa del Sol over the last 20 years. The result is that 57% of the coast in the province of Malaga is occupied by urbanizations and buildings, and in two municipalities (Marbella and Fuengirola) the percentage has surpassed 80%. No other province beats Malaga in consume of cement. On 161 kilometers of coastline there are 11 yacht harbors. The number of private vehicles doubled from 1988 to 2001. Avenida Andalucia in Malaga registers more than 95.000 vehicles per day (compared with 84.000 vehicles on Gran Via in Barcelona. The population has increased 50% since 1973, with up to 1000 inhabitants per square kilometer in the coastal municipalities (Belgium 311 inhabitants/km2, Holland 463).

The natural process of the building up of beaches is reduced 75% over the last 30 years, due to the construction of piers, yacht harbors and beach promenades. The sewage plants do not cope with the great amount of human and industrial waste.

The Junta de Andalucia has admitted that the town council of Benalmadena has modified its General Plan on 45 occasions over 4 years. The socialist group in the town hall maintain that the number of modifications actually amounted to 200. The Foro de Benalmadena, an association consisting of 13 urbanisations with approximately 2000 dwellings summed up the situation in an extensive report last year by saying: “Due to the fact that the Junta de Andalucia does not insist on compliance with the law, building activities are out of control, causing massification….The systematic breach of promises and intentions and the continuous changes made in the urbanistic plans, have resulted in absurd planning and unlawful and fraudulent situations, thus leaving the citizens without any protection of their rights.”

Marbella is a special case, where over several years many building projects have been executed on land not foreseen for construction in any legal general plan, and against the protests of the regional government in Sevilla. The only ”town planning” made was by mayor Jesus Gil y Gil, and his closest collaborators.

And example Costa Blanca

80% of the coast of Alicante province is filled with urbanisations and construction. In 60 municipalities is concentrated 46% of all building land (urbana and urbanizable) in the region Valencia. In Alicante province 9,9% of all land has been classified as urbano (building land) or urbanizable (land that may become building land). The corresponding figure for the province of Valencia is 5 and for the province of Castellon 3,9. In the first 500 meters from the coast inland is concentrated 15% of gross interior product of the region.

From 1998 to 2003 Torrevieja had an increase in its registered population of 103,3%, San Fulgencio an increase of 81%, Benijofar 74,6%, Els Poblet 66,2, Benitachell 65,6, Finestrat 65,6, Algorfa 52,6, Calpe 51,5, Rojales 51,5, San Miguel de Salinas 48,4, Altea 35,8, Orihuela 33,9, Denia 31,9, Benidorm 26,1 and the city of Alicante only 12,3% increase. From these figures can be seen that the demographical pressure is now building up also in the municipalities in the second coast line, while the areas of the interior are still losing population.

The ecologist organization “Greenpeace” has denounced that 76% of the coastline of the Valencia region is urbanized. They claim that 90% of the coasts of Spain is deteriorated, but find the case of Valencia especially alarming, and warn against the modifications in the general planning in such municipalities as Almassora, Benissa, Calpe, El Puig, and Castellon, “where one pretends to construct 200.000 dwellings and 100.000 hotelbeds in the next 10 years.”

The authorities warn that 200 of the municipalities in the Valencia region, most of them along the coast are affected by nitrates in the water, caused by the agriculture. The government of the region has also calculated that the construction industry only in the southern part of Costa Blanca is producing 332.800 ton debris per year, without plans for its disposal. In many areas the main sewage pipes still do not reach the urbanizations and settlements, and much raw waste are still going into the earth of out in the Mediterranean. Ecologists have calculated that 21.000 dwellings have been constructed in areas with danger of flooding, and that construction in such areas still continues.



Urbanistic fever

Due to the great demand for dwellings on the Costa Blanca over the last year, both private promoters and local town halls are projecting a continuation of the boom. There are 20 projects for new golf courses in the Valencia region (with urbanizations around). Here are some of the plans proposed or approved:

- The municipality of Daya Nueva (1.300 inhabitants at the moment) has developed a new general plan, with 7.600 new dwellings and a total of 26.000 inhabitants, 20 times the present number.
- The new general plan of Benimantell increases the population 3 times, from 460 to 1.550 inhabitants, in addition to new hotels.
- In Castalla a promotor has proposed a golf course with 36 holes, 12.500 new houses and two luxury hotels.
- A project for a golf course and 3.000 new dwellings in Orcheta would destroy the fruit plantations next to the town center.
- A golf course and 1.500 new dwellings are proposed by the town council in Albatera.
- San Miguel de las Salinas, with 5.800 inhabitants, is proposing to construct 3 golf courses and 40.000 new dwellings.
- Polop is planning the building of 10.000 new dwellings in the area of Ponoch.
- A new general plan for Guadalest, at present with 192 registered inhabitants, foresees construction to house a totality of 2.100.
- Calpe has decided to lift all limitation of height for construction in the areas of Morello and la Fossa.
- Denia has constructed 14.000 new dwellings over the last 4 years, and plans have been presented to permit the construction of 18.000 dwellings more.
- In La Romana promoters have plans to build 1.100 new dwellings.
- Ondarra have plans for a golf course and 1.954 new houses.
- Santa Pola has made a change in the general plan permitting an increase from 950 to 2.200 new dwellings next to the nature area of Clot de Galvany.
- In La Nucia is foreseen a new urbanization in La Serreta, with golf course, luxury hotel with 90 rooms and the construction of 2.000 new houses.
- In Guardamar the town hall has approved the construction of thousands of new dwellings near the lagoon La Mala.
- In Sierra Escalona of Orihuela os projected 2 golf courses and 2.100 new dwellings.
- Pilar de Horadada has also a project for a golf course with thousands of dwellings.
- In Sanet y Negrals (600 inhabitants) has been proposed a golf course, luxury hotel and hundred of new dwellings.


Water, traffic, noise…

With all the new dwellings at present under construction, and the many new developments proposed or under planning, the tourist areas on Costa Blanca (including the municipalities in second line), as well as the other tourist zones along the coasts and on the islands, will face severe problems of infrastructure and contamination. With the cancellation of the national water plan by the government, and no realistic alternative offered, at a time with less rainfall, it is difficult to see how the need for water can be covered. However, we stress that tourism and new settlements are not the main reason for the water problem, neither on Costa Blanca nor in the other tourist areas.

Already the roads in the coastal areas are at their limits, especially during the tourist seasons. The towns and villages are jammed with cars. For instance in the city of Alicante the number of vehicles increased from 134.000 in 1995 to 186.000 in 2002. Funds from the EU have financed 40% of the roads built in Spain over the last………………..years. With Spain soon becoming a contributor instead of a receiver of EU-funds, will there be sufficient financing for the new roads needed? And where shall we find parking in the city-centers in 5 to 10 years time?

The Ombudsmann of the Valencia region pointed in his report to the regional parliament in 2003 to the increasingly high level of acoustic contamination, proposed a plan against excessive noise and that the local administration should ask the opinion of the neighbors before giving licenses for bars and restaurants on open terraces. The Ombudsman questioned the towen planning policy of the region and asked that it be based on environmental sustainability.

The government has recognized that the property business, due to its high volume, great benefits and possibilities of whitewashing black money coming from criminal activities. This has led to an important increase in criminality in the tourist areas. The province of Alicante had an increase in criminality of 32% from 2001 to 2002. Some of the municipalities on the coasts have become “leaders” in crime. The president of the constructors in Alicante has warned that if the criminality is not stopped, the buyers of dwellings will find other destinations. In some municipalities citizens have formed “Neighborhood Watches” to assist the authorities to combat crime.

Warnings and resistance

The warnings against the negative effect of the unfettered construction industry are coming from many directions. The main lobby for the hotel tourism, Exceltur, has placed the blame for the empty beds in the tourist hotels on the excessive construction activity and the saturation of the coast. This warning has been echoed by importing tour-operators abroad, registering a diminishing interest for Costa Blanca. In a study by the Institute for Economical Studies, presented by the main employers organization in the Valencia region, Cierval, laments that the coastal areas of the region are “saturated and over-exploited”. The minister of the environment in the national government has said the same on several occasions.

In several places have been formed local citizens groups, to combat proposed gigantic urbanization plans, the lenient attitude of the administration toward or against the various effects of the saturation and the aggressive methods of the urbanistic Juggernaut. The association “Abusos Urbanisticos NO” has gathered …………signatures on a complaint to the European Parliament.

It is democratically very sound and necessary that the citizens, both Spanish and foreigners living in the tourist areas, take part in the resistance against the overexploitation and saturation of the coasts. For the Spanish, it is their native country. For the Europeans and other foreigners it is their selected country, that they do not want to leave, but to assist. For that reason, we do not shy from taking responsibility and speaking out clearly.

We want to register the excesses and abuses,
present proposal for improvement,
take part in the discussions,
organize ourselves to better be able to work for solutions .

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