Banco Sabadell swims against the tide in the real estate market.

It is not always wise to generalize. This may also be applied to the real estate sector.

To think that all land awarded to banks is a potato field and to assign it zero value could be a fatal mistake, even more if we look at institutions such as Banco Sabadell, which, after separating the wheat from the chaff, has identified plots with a high potential. The institution is now an expert in selling properties – it commercialized nearly 14000 assets in 2012 – and now is keen to find a solution to the land problem. It considers there is no point in having empty plots in some areas such as Barcelona, Madrid and Levante.

It has therefore decided to promote 2500 homes in the next three years, with an investment of 250 million Euros. It could seem a crazy idea to build new homes when there are still so may thousand homes to be sold, but the bank is convinced that the fifty developments it will start will have enough demand as there are certain ideas which will out of stock shortly. Sabadell, which created its own internal bad bank last year, is aware that the role of a bank is not to build.

Nevertheless, it thinks it is necessary for banks to reactivate the development sector. When the situation goes back to normal, it will withdraw. Will this strategy be a correct one?

Source: Expansión