From 1995 to 2007, Spain experienced one of the greatest increases in real estate prices in history — 201 percent. As any economist would tell you, this is what is commonly known as a bubble; and like all bubbles they must eventually pop. When the Spanish bubble popped, or exploded, no one was left untouched.
Though the global recession has had a profound effect on most European countries, Spain reported the most precipitous declines in home sales and values. According to a recent industry report, sales in 2008 were off by more than 25 percent. Some regions like Catalonia experienced declines of well over forty percent.
More alarming still was the fact that no one was buying newly-built homes. We know for certain that one-third of the new homes that were built between 2001-2007 are vacant today. This includes property rentals in San Pedro.
Where is San Pedro? It is a popular tourist destination located in a region of Spain known as the Costa del Sol. As you might imagine, the area has experienced a sharp decline in revenues from tourism since the global economic recession.
Another distressing fact is that building in San Pedro has all but ground to a halt. The truth is that with the market in decline and tourist dollars slowing, companies simply do not have the money to complete any new projects.