Real estate brokerage firms have truly been decimated by the collapse in the construction and real estate buying sectors. Only 25,000 real estate companies have survived the crisis of the 80,000 that were registered in the summer of 2006 when the construction boom was in full swing, amounting to a 70% decrease in real estate brokerage firms, with 180,000 lost jobs according to sector estimates reported by La Vanguardia newspaper.
The haemorrhaging occurring in the sector is far from over since, according to the president of the college of real estate agents of Barcelona, Joan Olle', real estate agencies will continue to close for all 2009, and less than 20,000 will survive at the end of the year. However ''not all bad things are necessarily harmful,'' underlined Olle', who regards the real estate crisis as a phenomenon that ''has allowed purging of the sector that was teeming with makeshift businesses, which were often only equipped with a mobile phone and were not professional''.
In Catalonia, the cuts will be even more drastic, since home access laws, which will be effective after this summer, require real estate brokers to enrol in an ad hoc register and to take out insurance, with deposit and civil liability funds. Olle' also predicts that in Catalonia, at the end of 2009, not more than 3,500 real estate agencies will survive.
The leading companies on the market are also having difficulties dealing with sales that have decreased over 80%, from all-time highs in 2006, despite dropping real estate prices, which have been estimated to be down 12% in cities like Madrid and Barcelona. The top Spanish real estate business, Technocasa, which had 1,400 agencies in 2006, ended 2008 with 308 sales points, revenues down 57%, and predicts further decreases.
Other large firms, like Expofinques, Mc, and Don Piso of the Habitat group, have failed, and have been forced to start a concurrence of creditors, the legal process of receivership. Coldwell Banker, a major real estate company on a global level, which in 2007 had 66 offices in Spain, closed its offices in the country.
Many real estate agencies are trying to handle the crisis by diversifying their business, which is now more oriented towards renting, for which demand is slightly increasing. Both on the Internet and through agencies, low-cost sales are progressing for homes that are non-new builds, with discounts of up to 40% on estimated market values.
In June in Barcelona, the first low-cost fair in the sector will take place, with prices reduced by at least 30%. According to Olle', the real estate crisis may have already bottomed out with a collapse in sales, and should start to rise again in the next six months, but increasingly, sales will be directly between individuals, through the Internet, and without added brokerage costs.
Source: ANSAmed