The crisis in the Spanish construction sector claimed another victim yesterday as the country’s fifth biggest property development company went into administration.

Promociones Habitat said it had financial commitments of up to €2.3 billion (£1.93 billion).

The Barcelona-based company blamed the property crash in Spain and the credit crunch for its demise. But Bruno Figueras, the chairman of Habitat, insisted the company was still a going concern.

“The company is still viable,” he said. "It has high-value assets backing up the business and giving it solidity."

Habitat assumed its €2.3 billion debt when it bought Ferrovial Inmobiliaria, the real estate arm of Grupo Ferrovial, owners of British airports operator BAA, two years ago.

The purchase proved to be ill-timed, coming just as Spain’s decade-long building bubble burst, leaving Habitat saddled with debt just when house sales started to slump.

In May, the company laid off 134 of its 390 workers.

Promociones Habitat is the second major Spanish developer to fall victim to the collapse of the building boom, after Martinsa-Fadesa went into administration in July with debts of €5.2 billion.

It joins the growing list of Spanish building companies which have gone to the wall with the meltdown of the construction sector.

Inmobiliaria Colonial, another major construction company, admitted there was a risk it might have to follow Habitat into administration.

It said in a statement that “in the last resort” it could go into administration if it fails to offload a series of stakes it owns in three other property companies.

Colonial is trying to sell its 15.45 per cent stake in Fomento de Constucciones y Contratas, one of Spain’s biggest building companies.

It also wants to sell a 33 per cent stake in the French firm Société Foncière Lyonnaise (SFL) and to sell Riofisa, a smaller company, which it bought in 2007.

The British Grosvenor property group was rumoured to be interested in buying Riofisa, according to a report in Expansion, the daily Spanish business paper.

Colonial currently has debts of €7 billion with various banks.

In February, its shares were suspended from trading after it lost 40 per cent of its value in two days. More than half of the board, including Luis Portillo, its billionaire chairman, were forced to resign.

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