Banks Speed Sales Up to the Detriment of the Property Values That Average at €125.000

22/08/2014 – Cinco Dias

Price and lending are the key to the real estate market revival. Playing with both in hand, Spanish banks set their own rules on the market.

According to the information provided by the General Council of Notaries, in the first half of the year the top six entities: BBVA, CaixaBank, Santander, Sabadell, Popular and Bankia sold together 39.241 properties. Moreover, new mortgage approvals improved by 37.6% if compared with the same period in 2013.

Without regard to loss and relying on provisions, banks lowered the average price per housing unit from 193.000 Euros in the entirety of 2013 (or the mean of 154.000 Euros in the first quarter of 2014) to 124.600 Euros registered in the first half of the ongoing year.

BBVA is one of the two entities that refused to sell their real estate servicers and thanks to saving Anida the bank won with astonishing 11.402 properties sold in the first half of 2014 for the total of €910 million. Given the amount, price per unit is estimated at €80.000, meaning a €446 million loss for the entity.

However, discounts are not always the only way. Banco Sabadell ranked the second, although it refused to slash prices and set an average asking amount at €175.000 per asset. This bank also decided to keep its servicer, Solvia, and it is planning to list it on the stock market.

Sabadell marketed 7.541 dwellings for the total of €1.32 billion. Sources from the entity assure the market ‘has changed’ as ‘currently it is difficult to find a house cheaper than €100.000’. Moreover, they claim ‘the purchases with mortgages go up’ and in some areas, such as Madrid, Cantabria, the Basque Country and the Balearic Islands, ‘values are rising’.

Next classifies CaixaBank that shifted its real estate management onto fund TPG, traded 7.229 properties for the total amount of €702 million, averaging at 97.108 Euros per unit and losing €468 million.

Santander was among the first to take up the strategy of massive sales of the repossessed assets. This bank has also handed over management of its servicer Altamira to U.S. fund Apollo. In the first quarter, the entity sold 6.000 units for over €1 billion in total. A single property acquired from this vendor cost €170.600.

One of the banks that boosted the sales in H1 was Popular. In fact, by selling its servicer (Aliseda) to Kennedy Wilson and Värde Partners last year, the entity gained €599 million and shed 3.274 REO properties (average price: €161.000).

Finally, Bankia which also transferred its real estate manager to a fund (Habitat to Cerberus) sold 3.345 properties for joint €336 million and an average price of 100.500 Euros per unit.

In turn, Spain’s ‘bad bank’ known as Sareb, held by the other entities and at the same time their rival, has been always vowing it would not influence the market prices. The firm marketed 8.104 units, not only its own but also those of developers, earning €441 million and setting the average value of a property at 100.000 Euros.

The banks’ average includes sales of storage rooms, garages and other property types.

Original article: Cinco Días (by Juande Portillo)

Translation: AURA REE