The €51 billion worth of sub-prime real estate dumped into Spain’s newly formed SAREB, “Bad Bank” is not attracting major investors because of the high asking prices, according to reports from Madrid.
Although villas, apartment, land and commercial assets transferred to SAREB have been written down by to 65% from book value there are better deals in the prime property retained by troubled Spanish banks to sell off themselves to international buyers.
International brokers, like Barcelona-based, Walker Property Spain who are contracted to market Spanish banks owned real estate, have deals with 67% discounts that come with 60% mortgages. The properties are often in better locations than SAREB-controlled assets and can produce yields of over 5% in Spain’s still booming tourist sector.
SAREB has already been forced to reduce its target profit from 15% to 13%, which equates to a discount of 52% and that on inferior property unwanted by the original developer and the funding bank that was forced to repossess the development and then hand it over to the “Bad Bank”.
But property investors say that even as Spain slips deeper into recession, SAREB has shown little sign of policy change, demanding prices that are close to those for prime assets in major markets like London and Paris.
“I’m not wasting any more time with SAREB,” said one investment manager at a global institution managing more than €5 billion of European property. “There are good deals to be had in Spain, but not through SAREB.”
Discounted key ready condo homes from Spanish banks
Spanish banks have around 500,000 retained properties, many already completed and key ready for sale in prime tourist locations. They come with peak to present discounts averaging 44%, legally required habitation certificates, and condominium homes often have fully operating management, swimming pools and other onsite amenities.
Said Ben Walker, of brokers Walker Property Spain: “There is now a strong demand for bank-owned prime homes being sold off at heavy discounts. We have a Citizen Spain service for international investors who are seeking to take up the Spanish Government’s offer of a passport and residency status if they purchase property worth €500,000 or more.
“Big discounts, generous mortgages and a much sought after EU passport is a tempting opportunity for buyers in the Middle East, Indian, Far East and South America.”
Biggest demand is for Barcelona, Costa Brava, Costa Blanca, Ibiza and Mallorca with the upcoming Costa Calida and jet-setter Costa de Sol also offering good deals.