The German housing market is the latest to be plagued by a disturbing phenomenon – abandoned construction sites, or so called “zombie projects” – and the country is not alone. Such unfinished developments, often left in a state of disrepair, are a stark reminder of the many challenges facing not only Germany, but other areas across the world.
Zombie projects have been observed in dozens of different countries over the last 16 years, often driven by a similar range of economic and market conditions. It was noted as early as 2008 in Spain, which experienced a significant number of abandoned construction projects following the housing market crash. Many unfinished developments were left vacant, creating “ghost towns” in some areas.
In the same year, the Irish housing market also faced challenges, with numerous abandoned construction sites becoming a common sight. The government even established a “bad bank” to deal with these unfinished projects. The Irish housing market, had actually experienced a significant boom in the early 2000s, fuelled by low interest rates and easy access to credit. However, this boom was unsustainable, and the market eventually collapsed in 2008. The collapse led to a wave of abandoned construction projects, as developers were unable to complete projects due to a lack of financing and declining demand.
In response, the Irish government established the National Asset Management Agency (NAMA) to deal with the growing number of abandoned construction projects. NAMA purchased a significant portfolio of distressed assets from banks, including unfinished developments and later worked to complete or sell these projects, helping to stabilise the housing market. Click link to read more: