Funds Demand Greater Discounts From Banks

17/03/2014 – ExpansionPro

After six years of recession, big residential transactions are still being dammed up due to lack of agreement between sellers and buyers. The difference in their expectations ranges from 15% to 20%.

The raise in minimum cover for mortgage portfolios (from 25% to 35%), ongoing housing developments (up to 60%) and plots (80%) conducted by banks in 2012 seem to be of no use.

The divergence between the banks and the funds is not based on market prices (currently -41.4%) but on business and margin linked costs that investors must bear. Taxes, management expenses, refurbishment, sales and the profit expected by the funds make the 15%-25% difference. That is why the investors prefer to wait, even if some of them have already acquired real estate platforms (…).

In such context, the entites prefer to market their properties through trading network as one-by-one transfers are more profitable for them. (…) However, the solution does not decrease the banks´unpaid credit scope. (…) Big transactions are said not to arrive before 2015.

This year, we observe more minor sales of credits with an asset as a collateral. The majority of them is tied to SMEs and large companies (offices, factories and industrial buildings), and even to garage spaces.


Original article: ExpansiónPro (Jorge Zuloaga, Lunes 17 de Marzo 2014, pp 16)

Translation: AURA REE