NEWS UPDATE | The Great Debate is on after a leading Spanish property broker advised buyers not to be tempted by homes dumped in Spain’s new “Bad Bank” formed as a condition of last year’s EU deal on bank refinancing.
76,000 homes have already been transferred into SAREB, the state-run “Bad Bank”, at discounts of up to 65%. They have been dubbed “sub prime properties”, unwanted even by the banks that financed their construction or provided individual mortgages. They were toxic assets of nationalised banks, including Bankia and Banco de Valencia.
SAREB intends to mark up the prices and make a profit of 13%, despite most of its toxic properties being in poor locations unlikely to interest international buyers who want good touristic amenities and clean beaches. SAREB’s original profit target of 15% was abandoned after a market price survey.
Spanish banks, that have retained 500,000 prime properties from developers they funded, are already selling them off at prices below those likely to be offered by SAREB. Currently, Costa apartments and villas are available at discounts of 45% to 70% and are attracting an increasing number of bargain seekers. Some deals include built-in mortgages of 70% to a maximum of 110%.
There can be no “sub prime property bargains”
Ben Walker, of Spanish brokers, Walker Property Spain sparked controversy when he said it was a “No brainer” that international buyers would prefer prime property to the toxic sub-prime property from the “Bad Bank”.
He said: “Why would anyone buy a property that is unwanted and dumped by the bank that originally funded its construction, when there are 1,000s of brand-new, key ready bargains in prime locations along favourite Costas that can be inspected and then purchased at similar prices with 10 year construction guarantees.
“When SAREB adds its required 13% profit margin and the high costs associated with inefficient state enterprises, who could say the asking prices remain competitive? A property is worth what the buyer is prepared to pay and the location and amenities help fix prices and what is a prime property. I cannot imagine there could be such a thing as a sub-prime property bargain”
Another Spanish real estate expert, Mark Stücklin, said: “After four years of denial and unrealistic price expectations, enough vendors in Spain are finally coming to terms with reality. House price declines have been accelerating in the last couple of years, and Spanish house prices are starting to offer good value. There are great bargains to be had.
“Prime Spanish property, in particular, might now a good investment for those prepared to do the homework to identify the opportunities.”