Party over at Madrid's downsized home show
By Ben Harding and Andres Gonzalez
MADRID (Reuters) - Walk through Madrid's vast and near-empty exhibition complex this week and you start to understand the brutality of Spain's property crash.
Two thirds of the exhibitors attending last year's Madrid Property Show (SIMA) are absent this week -- gone bust, too cash-strapped, or given no choice by court-appointed administrators keen to save money.
Nozar, one of Spain's biggest builders, said such shows imposed too great a cost in the current climate, so it was staying away.
Spain's biggest homes fair used to be quite a party.
A new generation of property magnates would toast their good fortune on huge stands costing a million euros ($1.4 million) and more for the five-day event, and thousands of buyers queued to be part of Spain's great property love affair.
Low interest rates and rising wealth from the late 1990s encouraged millions of Spaniards and foreigners to pile into the market then 'flip' homes on for a quick profit.
Prices soared -- tripling in a decade -- and the market responded by building 690,000 new homes in 2007, though Madrid building association Asprima estimated typical demand was just 300,000 a year.
Beyond the environmental cost, Spain's economy became dangerously skewed toward residential construction -- accounting for roughly 9 percent of national income at the height, according to Morgan Stanley -- before the credit crunch snuffed out the boom and sent record numbers out of business. Continued...