Alicanteos

The phones don’t ring off the hook any more at Spanish real estate offices, once the giddy beneficiaries of a sizzling property market. In fact, they hardly ring at all. And the revolving-door flow of customers has vanished.

Sharply higher interest rates, a glut of homes and newly jittery banks have come together to stall the engine that has driven one of Europe’s top-performing economies for more than a decade. And as the market slows, so has Spain’s economic growth.

Promoters who just a few years ago could sell new homes just by showing crude blueprints — they didn’t even bother to build pilot houses or apartments — are now desperate, and sometimes give away a year’s worth of mortgage payments, cars, trips and other freebies to lure buyers.

“The market has become paralyzed. Things are just paralyzed,” said Javier Martinez de los Santos, manager of a realtor’s group called the Business Association of Property Management.

Indeed, that market used to be paradise for builders and home-buyers enticed by interest rates below 3 percent. Real estate agents say people would literally line up to buy. Housing prices rose 17 percent in 2004, for instance, and a still-robust 9.1 percent last year.

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Alicante is getting four more hotels and 4,000 new homes, plus a remodelled stadium and new railway station.

British property buyers tend to ignore Alicante, which is a shame as the city is still very Spanish and has beautiful beaches and excellent shops - if you’re looking for a holiday home, the city is a place to consider. Several large projects to improve Alicante’s infrastructure are planned, and further property development is going in alongside them. The three main projects are the remodelling of the city’s football stadium plus the linking of the tram line to the city’s main railway station and the building of a convention centre.

The convention centre will have a major impact on the city’s run-down Sangueta district. Along with the centre, which will look directly out to sea, new homes will be built for the families who currently live there, along with new apartment blocks and three luxury hotels. At ground level there will be new commercial premises, creating room for shops, bars and restaurants. The fourth new hotel will be built, along with a massive shopping area, near the stadium. The tram station and rail station will be built underground, and the route will eventually go all the way to Alicante airport, making it even easier for tourists to reach the city.

Spanish construction companies may escape the worst housing crunch in 15 years after turning themselves into low-cost energy stocks.

Sacyr Vallehermoso and competitors together spent about $16 billion, almost a third of their annual revenue, in the second half of 2006 to buy stakes in Spain’s biggest oil and natural gas producers.

Some, like Sacyr, doubled the assets on their balance sheet. As much as half of the Spanish building industry’s profit now comes from dividends, company filings show. As oil and gas prices rise, those gains are only going to get bigger, said Francisco Salvador, a director of Venture Finanzas in Madrid.

“People are now starting to realize that there is a certain hidden value in these builders,” Salvador said. “Their results are just going to keep on growing now that they’ve minimized their exposure to the real estate business.”

According to the average of eight analyst forecasts in a Bloomberg survey, Sacyr will rise an additional 25 percent and Actividades de Construcción y Servicios, known as ACS and the largest builder in Spain, will extend gains by 24 percent.

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