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Spanish banks and Sareb “Bad Bank” gearing for autumn property sales drive

Spanish banks are planning a major property sales drive when executives return from their annual August vacation weeks on the beach – and they will be competing for the first time against Sareb, Spain’s “Bad Bank” controlling toxic, subprime apartments, villas and land devalued to €51 billion.

Sareb, owned by the Spanish Government and a consortium of the strongest banks, emerging from the property collapse of 2007, controls the land and developments that caused builders and their funding banks to collapse. Most of Sareb’s toxic portfolio has been written down to 65% of previous book value as the assets are mainly not in prime locations and unlikely to generate heavy demand in the short to medium term.

Banks that have had to take the hit on these heavy losses, have retained other “prime” properties they have been selling off at big discounts during a series of Summer 2013 super sales. Sales have been good, boosted by generous mortgages of up to 110% of the agreed sales price. There have been sell-outs on some developments within weeks of deals being launched.

The  Sareb “ Bad Bank” has recruited 100s of property experts to sort out the chaos of 1,000s of assets and millions of documents and computer records they have taken on “site unseen”. Slowly , since February 2013, they have compiled wholesale portfolios for international investment funds and consortia that have € billions organised to grab the best deals.

1,500 properties have been sold off and further offers for 2,200 are being reviewed, but Sareb admits it needs to lower prices and speed-up its operations if a sell-out is to be achieved in the next 15 years.

July 2013 saw the first Sareb-controlled apartments and villas offered for sale to the general public and the prices “look more wholesale than retail” according to international brokers, Walker Property Spain. The offers provide key ready, 4-bed detached golf villas from €139,000 and 2-bed key ready apartments on a gated island from €57,000.

Sales manager, Ben Walker said: “These first Sareb consumer deals look very competitive with those on offer from mainstream banks, who will now have to compete even more strongly for buyer interest and purchase commitment.

“We will be offering the best deals from Sareb and most other bank sources so international buyers can directly compare locations, prices, mortgages and buying costs on Fly to Buy inspections of properties that interest them most.”

A statement from Fitch Group warned: “Sareb and the banks will want to find the right balance between speeding up the pace of asset sales and causing prices to fall. It wouldn’t be in the interest of the market for significant price drops to occur by saturating the market with distressed property.”

Author: Kevin Barnett | Walker Property Spain News

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