Researchers in Madrid said unemployment would likely peak at 25 percent in Spain in the next three years with the building industry's losses escalating.

RR de Acuna & Asociados said losses in the real estate and housing industry could contribute to an 11 percent drop in Spain's gross domestic product, The Daily Telegraph reported Friday.

The current annual demand for properties is 218,000, but there are 1,623,000 properties on the market, which could take as six to seven years to sell. By contrast, the slump of home sales in the U.S., although easing lately, has 8.5 months of unsold homes on the market at the current rate of sales, the National Association of Realtors said Thursday.

Roberto Ruiz, strategist for UBS bank, said wages in Spain must drop 10 percent to become competitive again. The critical construction sector is likely to fall from 18 percent to 5 percent of the gross domestic product, he said.