Sunday, August 24, 2008

The truth about Martinsa-Fadesa.

Having spoken to and been contacted by agents, promoters and the public alike, here is our take on what is happening to Martinsa-Fadesa, one of Spain and Morocco's largest development companies.

Martinsa-Fadesa has gone bust and everyones money has been "stolen".

Martinsa-Fadesa has actually filed for voluntary liquidation to protect itself and hopefully trade out of it's situation. Commonly done when businesses run heavily projected cash flow with little or no forethought that "booms" can actually end.

This situation effects all Martinsa-Fadesa construction.

Not true, The Moroccan arm of Martinsa-Fadesa is a separate company, Fadesa-Maroc. As unwise as the Spanish arm has been in over exposing itself to vast debt it cannot even begin to manage, the Moroccan is independently owned and is incorporated as a separate company as a subsidiary. In layman terms, the Moroccan side can use the Fadesa name and resources, and the Moroccan side likely pays something in some form or another, whether that be a franchise type deal to use the name, of stock or what have you.

What this means to purchasers of Fadesa product is straight forward. If you have purchased property in Morocco on a Fadesa resort, your investment is safe for the time being, and there is no reason to panic.

If you have bought in Spain, a very different matter. Whilst Martinsa-Fadesa are assuring people they are looking for solutions to trade out of predicament they are in, It is all in limbo at the moment. Projects will get finished somehow, but it could be that the projects are sold on by the banks to new developers to finish. If this is the case, expect delays and specification changes. What is highly unlikely to happen is no resolve at all. This would not be in the interest of the government, local or national in Spain due to the number of properties involved, and the killing that any new developer will inevitably make to complete the project in the current climate.

A particularly misleading article was published in the Times back in July,
"Britons fear for deposits as Spanish property firm Martinsa-Fadesa folds"

The opening to the article is true to a point, it is possible that buyers of Fadesa product could lose their deposits. What it doesn't say is the steps that Fadesa are taking in a bid to get out of its situation. Fadesa also constructs in Hungary, which is also believed to be unaffected by this.

The Times also goes on very sharply to talk of the "Land Grab" situation in Valencia. This has absolutely nothing to do with the situation. "Land Grab" as it been termed by the media hacks in the UK is an alternative way for people to say "I need to complain because I am stupid and didn't read the small print" and "I thought it was just like home"

As a result, many people are in fear of having lost their deposits on Moroccan properties, as of this moment this is not the case and is unlikely to be either. As and when more news arises on this situation we will publish it.

Coming soon! Land Grab, What is it? What does it mean? and, How can I avoid it?

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