Banks take over from developing companies.

The financial institutions are not only the biggest sellers and gatherers of properties in Spain. They are also the ones who build more and the only ones to sell properties off plan, apart from the cooperatives. Two years ago some of them took the first steps to try to increase the value of the plots in their hands, but now all those who did not transfer their assets to Sareb are doing that, Santander and BBVA being the ones who are developing more the role of developing bank.

Madrid is their favorite testing ground, where they are experimenting all different possibilities. Mainly, because Madrid is the most active market in the first residence segment and the one offering less risks. This is why there are at least 15 developments where banks are assuming a leading role.

In 2011 Bankia and Catalunya Caixa were the first ones to try this option. They transferred the land and granted a to the company Vía Célere in order to develop and sell three developments in relatively secure areas in Madrid, a formula that the analysts within the sector call “operation crane”. The works continue and so do the sales, but the credits that were granted have been transferred to Sareb. Time has passed, reality has set in and, as there are no solvent building companies within the sector, banks have chosen to become developing companies.

In Anida, the real estate subsidiary of BBVA, they admit it. “We have – only in Madrid – a portfolio or more than 20 plots, with different sizes and development stages, with significant locations such as Antonio López, Méndez Álvaro or Serrano”, they explain. “There are numerous projects being studied right now that will start in the short and medium term in most districts”, they add.

The last one to join this movement, less than one month ago, was Kutxa Bank in Vallecas, with a development – Jardines del Sureste – which, for many will mark a milestone in the battle for the demand in Madrid, as the homes have been put on sale for 1600 Euros per square meter. “They are bringing down prices radically. Until recently, operations were closed based on values of 2000 Euros per square meter – building value plus impact of the land – and now they are selling finished properties well below that level”, as declared by sources from a trading company. La Caixa and BBVA are also building in Vallecas, although at higher prices, as they started to market them earlier.

Plots are the most unwanted asset in the hands of banks since the Government and Brussels obliged to cover up to 80% of their value in books more than one year ago. And although many of them would like to get rid of them rapidly, the real estate sector has lost weight so dramatically and is so risky that there are no buyers. Not even for those plots that could be valuable if the market goes up.

But this year and once the loss has been accounted for, the institutions do not have anything to lose. On the contrary. For this reason banks have been selecting and preparing those plots where they will build or that can have any value in the future because, once the losses have been covered in 2012, any operation which might increase their value would have a profit. (…)

Currently Altamira Santander Real Estate is marketing four developments off plan in Madrid. Each one of them is aimed at a different demand, but most of them are small sized, looking for buyers indifferent to risk. (…)

Although Altamira does not wish to reveal its plans, the number of residential plots in their balance is rather high. The catalogue published in April reveals that the plots in the capital would allow the building of more than 600 homes. And these are not all. (…)

Most banks are choosing the same method to promote. They create small coordination teams in their real estate subsidiaries that hire an architectural firm, a building company and an engineer that acts as the manager of the project. They are appointing middle sized construction companies, not too affected by the crisis, like Arpada, Ortiz, Oproler or Avintia.

They are also surrounded by real estate consulting companies, that value the possibilities of the land based on the possible acquirers and establish the selling price. With such a low demand, this is the most tricky part. (…)

Generally banks are offering the projects and its marketing through tenders, dividing the game between companies certified by the own banks. (…)

BBVA is one of the banks that most resorts to this division of tasks. It gathers four developments in Madrid, 15% of the total developed in Spain by this institution. (…)

The Basque bank announced an investment plan of 100 million Euros in those residential developments which offered a profit until 2018. (…) Other institutions do not offer any information on their developing strategy (…)

Source: El Mundo