The economic decline of the Menor Sea: an ecological disaster with a real estate cost of 4,150 million

"We have joined everything: the Covid, the economic crisis that affects employment and the lower sea. The latter is a shame and we hope it is quickly solved, b

The economic decline of the Menor Sea: an ecological disaster with a real estate cost of 4,150 million

"We have joined everything: the Covid, the economic crisis that affects employment and the lower sea. The latter is a shame and we hope it is quickly solved, because of course it affects demand." He speaks Maria from the real estate Juan Galo located in Los Alcázares, just on the riverbank of the Murciana Albufera. This privileged environment has run through years an unprecedented environmental crisis that begins to have consequences in the economy of the area. The first, in the housing market.

A recent report by the Bank of Spain has studied how an ecological disaster such as the Menor Sea can have serious consequences on the economy of a region and the financial system. Its objective was to start from a specific case for, climbing the results of the analysis, noticing of the serious economic consequences of climate change. It is not the first financial regulator that alerts this threat, but its research sits a precedent with data illustrating what could really be the impact of this type of phenomena.

The conclusion reached by the Bank of Spain is that environmental degradation in the largest saltwater lagoon environment in Europe has already been translated into a loss of value of the property in the area compared to surrounding regions such as the Southern Alicante, significantly affecting the richness of homeowners in the region and becoming the embryo of a potential financial problem. According to the data that handles the analysis, a house located in Torrevieja has been revalued, more than 45% more in the last six years than another similar features located in any of the municipalities near the sea.

The decline started in 2016 coinciding with the first of the great crises that have affected this natural environment with the appearance of thousands of fish killed on the shore. From there, the area begins to lose tourist attraction and, without this, it reduces the appetite of Spanish and foreign families to buy a residence in the field. The main beneficiaries are the surrounding municipalities of southern Alicante located on the Mediterranean coast. Until then, the Bank of Spain accredits that there had been no differences relevant in the evolution of prices in both areas after the Batacaz that supposed the 2008 crisis. From the first ecological disaster, the value difference exceeds 500 euros square meter.

The question is how this price difference is then transferred to the pocket of families and if, ultimately, it can be the origin of a relevant financial problem. The conclusion is that this risk would not exist in the case of the Menor Sea, as it is a small and isolated area, but it could lead to a greater threat if as a result of climate change, the sea level increases significantly and threatened other coastal nuclei from the country.

"To the extent that the materialization of climate change occurs comparable environmental damage in other areas of Spain, this analysis also indicates that economic damages and their implications for financial stability could be significant," warns the study.

In relation to richness, the impact is immediate. The Bank of Spain estimates a loss of 4,150 million euros in recent years for the owners of the 117,000 homes located in the Menor Sea, whose value as a whole exceeds 9,000 million euros. It is the same figure for 2016, since the revaluation of these properties in recent years has been 0%.

He explains Pedro Gurrea, of the Boreal Real Estate located in San Javier. "Between 2016 and 2020 we saw an evolution of the slowest and slowest prices, but now we are seeing a strong recovery of operations." This knower of the real estate sector says it is difficult to separate the impact on the market that the environmental impact pandemic has had by the lower sea, but it removes iron to the problem and is confident of the potential of the area. "The Minor Sea takes years in poor condition, but people still come and bathe. This year we have rented everything we had," he explains.

In the case of mortgages, the conclusions obtained from the study are quite similar. The Bank of Spain concludes that between 2014 and 2021, the medium mortgage in the Murcian region has remained stable around 60,000 euros, while in the nearby area of southern Alicante it has doubled as it passed from 44,000 to 90,000 euros In the same period. "The results suggest that an ecological deterioration as described has a potential to significantly reduce the value of the available collateral, thus making access to credit in the affected areas," he notifies.

Updated Date: 08 November 2021, 10:44

You need to login to comment.

Please register or login.

RELATED NEWS